Has Digital Finance Improved the Transmission Efficiency of Monetary Policy?
DOI:
https://doi.org/10.54097/qja2k438Keywords:
Monetary Policy Transmission, Quantity-based Monetary Policy, Price-based Monetary Policy, Digital Finance, Financial Agglomeration.Abstract
During the period of global economic transformation and financial innovation, the effectiveness of monetary policy transmission has a significant impact on economic stability. Meanwhile, the emergence of digital finance has brought both new opportunities and difficulties. This research aims to determine the degree of digital finance development. It utilizes panel data from 296 Chinese cities spanning from 2011 to 2022. By selecting the digital inclusive financial index and M2, LPR as indicators, the double fixed effect is used for in-depth research. From the perspectives of quantity-based and price-based monetary policy, the research meticulously examines the effect of digital finance on the effectiveness of monetary policy transmission. With the degree of financial agglomeration serving as an intermediary and moderating variables like Gross Regional Product, Artificial Intelligence Level, and Total Retail Sales of Consumer Goods playing varying roles, it discovers that digital finance significantly influences the transmission efficiency of the two types of monetary policy in distinct ways. This research has contributions. First, the unique topic selection focuses on the relationship between digital finance and monetary policy transmission from a city perspective. It's crucial for the financial system. A thorough examination can provide an economic framework. Second, it adopts a multi-dimensional perspective. It divides monetary policy based on money supply and interest rates and does research at the municipal level. Third, it takes certain competencies as moderating variables and financial agglomeration as the main intermediary variable to build a research system. This offers new viewpoints. Overall, through careful data processing and modeling, this research thoroughly explores the intricate relationship between digital finance and monetary policy transmission. It also provides a solid scientific foundation for policy establishment, which is of great importance for promoting financial stability and high-quality economic development. Additionally, it contributes to the advancement of research in this field.
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