Research on the impact of double-pillar regulation on commercial Banks’ risk-taking

In 2017, the 19th National Congress formally proposed the construction of a two-pillar regulatory framework of "monetary policy + macroprudential". Compared with a single pillar, it can enhance the central bank’s ability to control systemic financial risks. This paper empirically analyzes the synergistic effect of macroprudential policy and monetary policy on banks’ risk-taking from both micro and macro perspectives by using panel data of 242 Chinese commercial banks from 2011 to 2020 through the fixed-effects estimation and systematic generalized moments estimation (GMM) method. The results show that, firstly, the "two-pillar" regulation affects bank risk-taking by influencing the return on assets and reserve requirement ratio of commercial banks; secondly, the effect of the "two-pillar" regulation varies according to the scale of commercial banks and the economic cycle. Finally, it puts forward relevant policy recommendations for improving the regulation of commercial banks.