[STBI-28-04-2016] Involuntary Excess Reserve and Heterogeneous Transmission of Policy Rates to Bank Lending Rates in China

Dr. Nguyen Vu Hong Thai

Hall H.001, UEH School of Economics
10:00 am, Thursday, 28-04-2016


This study examines the impact of liquidity and involuntary excess reserves on interest rate pass-through in China. Employing Error Correction Model estimation based on a sample of 86 banks over the period of 2000 – 2013, the study finds that liquid banks can better shield against tightening monetary policy and adjust lending rate sluggishly. In contrast, banks with larger involuntary excess reserves tend to increase lending interest rates more rapidly in response to tightening monetary policy. We conclude that unwanted liquidity may lead to the risk-taking behaviours which are detrimental to financial stability.


Dr. Nguyen Vu Hong Thai is currently Lecturer in Economics and Finance at RMIT University Vietnam. Dr. Thai graduated PhD in Banking, Finance and Monetary Economics in 2013 from The University of Nottingham, United Kingdom. Thai’s studies focus on monetary policy, banking performance & risk-taking behaviours, banking competition, capital flows and financial crisis. He has published some studies in journals such as International Review of Financial AnalysisJournal of International Financial Markets, Institutions and Money, and Applied Economics.

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