<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper measures the financial strength of the People’s Bank of China from the perspective of balance sheets, and then examine empirically whether its financial strength influences its policy commitments given its financial conditions. The econometric results suggest that, first, the financial strength of the People’s Bank of China does affect its policy performance, although the effects are weak and overall results lack robustness with respect to the econometric technique and the choice of alternative measures of financial strength. Second, alternative financial strength indicator plays different role in helping the People’s Bank of China achieve its alternative policy objectives. Therefore, maintaining benign financial conditions and a resilient balance sheet are necessary pre-conditions for the People’s Bank of China to achieve desirable policy outcomes. Third, the People’s Bank of China’s current standalone finance is healthy under our stressing tests, despite certain concerns attained.</p></abstract>

This paper measures the financial strength of the People’s Bank of China from the perspective of balance sheets, and then examine empirically whether its financial strength influences its policy commitments given its financial conditions. The econometric results suggest that, first, the financial strength of the People’s Bank of China does affect its policy performance, although the effects are weak and overall results lack robustness with respect to the econometric technique and the choice of alternative measures of financial strength. Second, alternative financial strength indicator plays different role in helping the People’s Bank of China achieve its alternative policy objectives. Therefore, maintaining benign financial conditions and a resilient balance sheet are necessary pre-conditions for the People’s Bank of China to achieve desirable policy outcomes. Third, the People’s Bank of China’s current standalone finance is healthy under our stressing tests, despite certain concerns attained.

On the People’s Bank of China’s Financial Strength and Policy Outcomes

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"On the People\u2019s Bank of China\u2019s Financial Strength and Policy Outcomes"}

This paper measures the financial strength of the People’s Bank of China from the perspective of balance sheets, and then examine empirically whether its...

On the People’s Bank of China’s Financial Strength and Policy Outcomes

Pubblicato online: 18 set 2020

Pagine: 135 - 161

Ricevuto: 12 mar 2019

Accettato: 27 giu 2019

DOI: https://doi.org/10.2478/jcbtp-2020-0041

Parole chiave
Financial Strength, The People’s Bank of China, Balance Sheet Analysis, Stress Testing, Policy Performance

© 2020 Lixin Sun, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

On the People’s Bank of China’s Financial Strength and Policy Outcomes

Pubblicato online: 18 set 2020

Pagine: 135 - 161

Ricevuto: 12 mar 2019

Accettato: 27 giu 2019

DOI: https://doi.org/10.2478/jcbtp-2020-0041

Parole chiaveFinancial Strength, The People’s Bank of China, Balance Sheet Analysis, Stress Testing, Policy Performance

© 2020 Lixin Sun, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Parole chiave
Financial Strength, The People’s Bank of China, Balance Sheet Analysis, Stress Testing, Policy Performance