Abstract:

Commercial banks monopolizing deposit and loan markets have weakened the effect on credit transmission mechanism of our expansionary monetary policy. In addition, there are some other causes: the structure of bank assets and the private financing structure are quite irrational, and investment demand is inelastic to the interest rate. These conclusions are based on an analysis of banking general equilibrium model and banking comer equilibrium model of labor division between banks and other industries in condition of incomplete competition.

Key words: incomplete competition, monetary policy, credit transmission mechanism, weakening