Abstract

There are two events which shock the world in the 21th century, one is AFC（American Financial Crisis）in 2007, the other is economic boom in China.

The former has caused the researchers' introspection on the financial structure of the United States. A large number of empirical studies have shown that market-oriented financial structure not only can't completely disperse risk, but there contains huge financial risk in itself, which is the important cause lead to the financial crisis. Furthermore, the Fed monetary policy doesn't reduce the financial risk and keep the real economy steady, because it lags behind the change of financial structure.

For the later, people's greatest attention is whether China can achieve economic transformation and get rid of the“middle income trap”after 30 years of rapid growth. So the Chinese government is vigorously deepening market-oriented reform in various fields including finance.

With economic reform, China's financial structure has changed a lot, which brings opportunities for economic growth and challenges to monetary policy and economic stability. Firstly, the change of financial structure has transformed structure of financial risk, financial market become a new source of risk. For instance, Chinese stock market raise a lot of money for thousands of listed companies and push development of these enterprises, but drastic fluctuations of stock market affects stability of the economy and the society, stock market become the greatest source of financial risk. Secondly, monetary policy efficiency is dropping in China. For example, currency circulation is great in China, but the difficulties and high cost in the financing of SMEs（small and medium-sized enterprises）still exist. The main reason is a lot of money is hard to enter into the real economy through the traditional transmission mechanism with the change of financial structure. Monetary policy lags behind the change of financial structure, the mismatch between the two lead to reduce monetary policy efficiency. Both AFC（American Financial Crisis）and China's financial development show that there are complex and close relationship among financial structure, financial risk and monetary policy.

Based on above analysis, financial structure, monetary policy and financial risk should be integrated to study as a whole, this book has important theoretical value on the point.

The practical value of this book is to improve monetary policy framework based on the change of financial structure. Intermediate target is an important part of monetary policy operation framework. May 2011, the People's Bank of China announced to replace the credit scale with the aggregate financing to the real economy as new intermediate target of monetary policy, which causes widespread concern and controversy at home and abroad. Controversy originates from the lack of theoretical analysis and empirical test to this new financial concept. This book argues that adjustment of monetary policy intermediate target is important measures, which adapt to the change of financial structure and raise monetary policy efficiency. More importantly, the aggregate financing to the real economy is theory and practice innovation because it breaks through and perfects traditional monetary and financial theory. Unfortunately, the current literature don't recognize this point. Another part of this book is to rediscover major theoretical innovation value and practical significance of the aggregate financing to the real economy from the perspective of financial structure, and make empirical test its adaptability as monetary policy intermediate target, then put forward to reconstruct monetary policy operation framework around the aggregate financing to the real economy.

There are 8 chapters in this book which takes financial structure as main line. Based on changes of financial structure and lessons from AFC, by integrating financial structural, financial risk and monetary policy as a whole, this book hope to solve some of the current financial problems and promote China's economic development, which is the ultimate goal of this book.

There are four conclusions in this book. First, the mismatch between financial structure and monetary policy is an important cause for financial crisis. Second, China's financial structure is changing, the traditional monetary policy which based on banking system can't adapt to the new environment any more and need to be reformed. Third, the aggregate financing to the real economy, which is breakthrough and innovation of monetary theory, adapts to the changes of China's financial structure and meets the requirements of monetary policy intermediate target. Fourth, reconstructing monetary policy operation framework, which regard the aggregate financing to the real economy as monetary policy intermediate target, is a important route to raise monetary policy efficiency and prevent financial risk.

The main contribution of this book is to fill the research gaps in crossing field of financial structure, financial crisis and monetary policy. In addition, we test empirically the adaptability of the aggregate financing to the real economy as the new intermediate target, and analyse profoundly its logical connotation and innovation value. Last but not least, the book perfect monetary policy operation framework from the perspective of financial structure.