Risk-taking Channel of Bank Liquidity Creation Affecting Real Economy: Recommendation to tobacc industry

Objection: We investigate whether risk-taking channel exsits in the interaction of monetary policy, macroprudential regulation, liquidity creation and enterprise output. Methods: We adopt the mediating effect model with stepwise regression, Sobel and Bootstrap test to identify risk-taking mechanism of liquidity creation impact on real economy. Results: We find that pricing tools of monetary policy and macroprudential tools can inhibit the changes of risk-taking and liquidity creation caused by quantitative tools. In particular, the increasing systemic risk arises the off-balance-sheet liquidity creation. Consequently, risk-taking is an important channel for regulating affect liquidity creation. We also find that liquidity creation can increase business income through credit line. Conclusions: Reducing the internal conflict between monetary policy and macroprudential regulation and improving the banks’ soundness is beneficial to liquidity creation, further stimulating the sustainable development of enterprises. In particularly, bank should innovate credit products, for example tobacco loan in Yunnan or Gui Zhou, to support of regional economic growth.