N°23-14: Central Bank Policy and Commercial Bank Discretion: The Roles of Commercial Bank Ownership and CEO

We examine the roles of commercial bank ownership and CEO faction membership in facilitating or in hindering the implementation of central bank policy in China. Both ownership and membership matter: provincial or city government-owned banks whose CEOs are members of a generalist faction within the Chinese Communist Party respond least to People's Bank of China mortgage lending guidelines; central government-owned banks with specialist CEOs respond most. Bank responses have real effects on housing markets. Central banks should be mindful of both commercial bank ownership and bank CEO connections in attempting to gauge commercial bank response to central bank policy guidance.