Why does the credit not increase but decrease when RRR is cut?
Researcher of Institute of Finance and Banking, CASS
Because of the change in domestic banks' credit growth model, to look at the current loan behavior of domestic banks with experienced eyes can only see the surface. The behavior mode of domestic banks in 2012 is changing significantly, which is a new perspective for us to re-understand the current domestic bank market.
After two cuts of the reserve requirement ratio by the central bank, the lendable funds of domestic banks have increased by nearly 800 billion yuan. However, from the situation in January this year, credit growth has not only failed to increase, but has instead decreased by 288.2 billion yuan. I analyzed that this may be related to two issues. One is related to the monetary policy target. The macro-control target of the central bank's monetary policy in 2012 is to let money and credit growth return to normal. The second is related to the significant changes in the behavior mode of banks since 2011.
Under the existing evaluation mechanism, there was a dominant idea in domestic bank loans a few years ago: under a given credit scale, banks often adopt the way of early lending and early benefits, meaning that credit occurs at the beginning of the year, and its profit growth can be guaranteed by the end of the year.
With the tightening of domestic credit scale in 2011, under the condition of limited credit scale and lower limit management of loan interest rates, the later it is, the higher the bank loan interest rate will be, and the higher the bank's profitability will be. Therefore, December 2011 became the month with relatively fast credit growth that year. However, the market's expectation of high bank credit growth in January 2012 did not happen.
The central bank's cut in the RRR seems to be a signal of relaxation, but whether this signal can be converted into increased financing is still uncertain, which largely depends on the choice of commercial banks. In addition, banks are currently testing new credit models and gradually changing the structure of credit allocation, such as increasing financing for small and medium-sized enterprises, agricultural-related enterprises, agriculture, and affordable housing.
Because of the change in the credit growth model of domestic banks, looking at the current loan behavior of domestic banks with experienced eyes can only see the surface. The behavior mode of domestic banks in 2012 is undergoing significant changes, which is a new perspective for us to re-understand the current domestic bank market.
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