Targeted monetary policies play a crucial role in promoting economic stability and supporting vulnerable sectors in China. This paper investigates the impact of reductions in the targeted reserve requirement ratio on employment, considering the perspectives of banks, enterprises, and regions. The findings indicate that, at the bank level, reductions in the targeted reserve requirement ratio significantly enhance total credit issuance and increase loan provision to small and micro, and agricultural enterprises. At the enterprise level, these policies encourage labor recruitment across various types of enterprises. On a regional scale, reductions to the targeted reserve requirement ratio lead to an accelerated growth rate of employment in urban private enterprises and individual businesses. However, their overall effectiveness in fostering employment and promoting growth in urban unit employment is less pronounced. Additionally, the promotional effects of the targeted reserve requirement policy remain relatively stable under economic shocks.
Qu et al. (Fri,) studied this question.