By constructing an artificial micro economy including a central bank and a commercial bank, this paper attempts to examine strict decision-making in loan supply and bad loan management by private banks as well as the degree of monetary intervention by the central bank, and how this affects the emergence and collapse of asset bubbles. The virtual experiment demonstrates that the intervention is unnecessary if the commercial bank manage credit creation and nonperforming loans in a self-controlling way. Otherwise, the intervention is both welcoming and effective.
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