Digital Finance,Double-Link Interaction and Transmission of Monetary Policy Interest Rate Channels
This article introduces a new perspective on how digital finance impacts the monetary policy interest rate channel by constructing a Computable General Equilibrium(CGE)model.It highlights"two major stages and three mecha-nisms"in this process.The"two major stages"refer to the transmission through"short-term interest rates to long-term inter-est rates"and through"long-term interest rates to corporate investment,"while the"three mechanisms"encompass the transmission dynamics stemming from digital finance altering the interest rate expectation term structure,the sensitivity of cor-porate investment to interest rates,and the conditions of credit allocation to corporations.The study finds that,firstly,digital fi-nance strengthens the effect of the monetary policy interest rate channel through these"two major stages".Secondly,digital fi-nance significantly facilitates the establishment of the interest rate expectation term structure and considerably reduces finan-cial market frictions.Further analysis shows that,compared to traditional finance,digital finance indeed has an independent ef-fect on the interest rate channel,indicating that digital finance has a unique function in reducing financial market frictions.However,this effect displays significant heterogeneity across different dimensions of digital finance indicators.This research provides the suggestions that expanding the scope for incremental innovation in current monetary policy through the coordi-nated advancement of new financial technologies and market-oriented institutional reforms.
Digital FinanceInterest Rate ChannelFinancial StructureFinancial Friction
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