With the information technology boom, the development of Internet Finance is justified to have a notable impact on the effectiveness of monetary policy. In allusion to the development of Internet Finance and changes in monetary policy from 2007 to 2018, this paper takes the bank credit transmission channels as an entry point and builds a Vector Error Correction (VEC) Model based on co-integration analysis. In this paper, we attain the influence of Internet Finance on intermediate targets and ultimate targets of monetary policy with the methods of Co-integration analysis, Granger test, VEC model and so forth by comparing bank credit channels and interest rate channels. The results of the research have revealed that Internet Finance weakens the transmission effect of monetary policy through bank credit channels, improves the market endogenous nature of money supply, which hinders the achievement of the ultimate goal of monetary policy.
Keywords: Monetary Policy, VEC Model, bank credit channel, internet finance
