Study On The Financing Effect For Smes And The Risk Spillover Effect Of Shadow Banking In Our Country

"Shadow banking" which draws global attention since the American sub-prime mortgage crisis broke out has increased rapidly in China in recent years.However,shadow banking also raises public concern due to the potential risks caused by its high leverage and lack of regulation while it has the advantages of complementing traditional banking activities and providing more investment and financing channels for enterprises and residents.Actually,we should recognize the rationality of the existence of shadow banking rather than exaggerate its risks since it can be seen as a neutral concept and the inevitable result of financial innovation,therefore we should promote the cognition of the shadow banking with the objective and fair attitude.Then it would be helpful for optimizing the shadow banking system,maintaining the security of financial system and promoting the development of the real economy in our country by exploring the financing effect for SMEs and the risk spillover effect of shadow banking.The paper has sorted out the domestic and international theories of shadow banking and attempts to clarify the concept and characteristics of China's shadow banking drawn from a number of complicated concepts.And it also analyzes the origin of China's shadow banking from the perspectives of financial disintermediation and three aspects of investors,financial intermediaries and financiers.Then it makes an elaboration on the development,the current situation and the trend of China's shadow banking.On that basis,the analysis of the financing effect for SMEs and the risk spillover effect of China's shadow banking at the present stage has been emphasized,which can be shown as follows:Firstly,it elaborates the financing constraints mitigation effect for small and medium-sized enterprises.This paper explores the intrinsic mechanism for the impacts of the shadow banking on the SME financing from the perspective of gathering idle funds,increasing liquidity,promoting investment efficiency and reducing financing costs.On that basis,it confirms that the growth of the shadow banking system can ease the financial constraints of the SMEs in China by using the cash-cash flow model based on the data from China's shadow banking and small and medium listed companies in Shenzhen Stock Exchange between the end of 2010 and the first half of 2016.Secondly,the substitution and complementary effects for commercial banks' SMEs credit business has been analyzed.The paper tries to explore the impact of shadow banking on bank credit for SMEs,whether substitution effect or complementary effect,based on the empirical research by using the SVAR model.On the one hand,it is unnecessary to unilaterally exaggerate the negative impact of shadow banking and take draconian regulatory measures against it,because it is helpful to alleviate the constraints of SMEs and play a "supplementary" role for bank credit of medium-sized enterprises;on the other hand,we should recognize the substitution and crowding-out effect of shadow banking on bank credit of small and micro business which would weaken the financing abilities of small and micro enterprises from formal finance before the shadow banking has not become the main financing sources of small and micro enterprises due to its limitation.The substitution and crowding-out effect originates from that shadow banking can better meet the "short,small,sharp,frequency" financing needs of small and micro enterprises,and the finance services of shadow banking is serious homogeneous with bank credit services.Therefore,it would be helpful to strengthen the "supplementary" and weaken the "substitution" effect of shadow banking on commercial bank credit by changing the homogenization between shadow banking's finance services and bank credit services,so that shadow banking as well as commercial banking can better serve SMEs' financing.Lastly,the risk spillover effect of shadow banking on the financial system has been elaborated.The empirical results mentioned above testifies that the existence of China's shadow banking is rational and necessary because of its advantages of alleviating the financing constraints of SMEs,covering the financing gap of the real economy,making up for market failure.However,the shadow banking risk resulted from the maturity mismatches and the high leverage has direct or indirect impact on financial system through the path of financing,balance sheet,payment system,business homogeneity and public confidence since China's regulatory system has not kept up.Besides,many factors,such as the economic cycle fluctuation,the correlation of financial institutions,the high risk of financing objects,the marketization of interest and the development of the Internet Finance,will strengthen and enlarge the risk spillover effects and threaten the stable operation of the financial system.This paper also identifies that the risk of the shadow banking system is significantly higher than that of the traditional commercial banking,even higher than the overall risk of the financial system by using the GARCH-Copula-CoVaR model.The sequence of the subcategories of shadow banking is:the trust industry,the securities industry,the investment industry and the folk industry according to the risk degree from high to low,and also the sequence of the subcategories of shadow banking is:the trust industry,the securities industry,the folk industry and the investment industry according to the degree of systemic risk spillover.Particularly,the trust industry and the securities industry take the top spot according to both their own risk degree and the degree of risk spillover.Therefore,although China's shadow banking with less leverage and manageable risk is less likely to pose systemic risk,we should still pay attention to the increasing leverage,the rising maturity mismatch and the growing risk spillover effect of some shadow banks and implement necessary measures to adjust their leverage to reduce their risk level and the degree of risk spillover in order to maintain the security to financial system.Considering China's shadow banking situation,its actual effect on SMEs financing and the risk spillover effect at this stage,it is recommended that China's shadow banking achieve its goal which is promoting the beneficial and abolishing the harmful should under the guidance of inclusivity,legality,innovativeness and pertinency by its compatibility,upgrading business and optimizing structure.The specific suggestions include as follows:inclusivity,according to the idea of regulatory sandbox in the U.K.,means to-legalize the shadow banking business regarded in the grey zone formerly by the method of legislation rather than the large and all-inclusive financial regulation pattern,and at the same time,moderate deleverage even firm leverage should be taken in order to avoid high financing cost caused by overregulation;innovation,means to innovate in shadow banking business and model,and also transfer the thinking of regulation;legality,means to improve the regulation legislation and establish perfect credit system lawfully in order to promote information disclosure;pertinency,means to implement differential,relational and dynamic regulation.What needs to be pointed out is that differential regulation actually includes direct regulation,indirect regulation and ancillary regulation,which based on the different categories financial institution's own risk and the difference of risk spillover in shadow banking system.The innovation in this thesis embodies in the following part:firstly,it determines the reasonable size of China's shadow banking by clarifying its conceptual characteristics.In the study of shadow banking in China,it is still controversial that whether there are actual shadow banking and how to define it.This paper attempts to clarify the concept and characteristics of "China's style shadow banking" drawn from a number of complicated concept and determine its size based on the main categories of shadow banking in order to establish a good theoretical foundation for the correct understanding and evaluation of the economic effect of China's shadow banking.Secondly,it researches the shadow banking actual effect on SMEs to settle the dispute in relevant research and improve shadow banking quality by its business upgrading.Unlike existing study focused on the optimization of "quantity" of shadow banking,this paper applies method combining theoretical and empirical way to solve the problem that "whether shadow banking could effectively ease the small and medium-sized enterprises financing constraints or not","whether the alternative or complementary role that shadow banking plays on SMEs'financing".On this basis,it gives the proposal that China's shadow banking needs upgrade its business for the quality promotion,and so that the solution to the difficulty in SMEs' financing can be found;Finally,it provides recommendations for optimizing shadow banking structure and improving its regulation through analyzing the shadow banking risk spillover effects on the financial system quantitatively and defining shadow banking main undertaker of the overflow risk and its trend in the financial system.This article extends the research object to quantify the risk spillover effects that the shadow banking makes on the financial system and defines shadow banking main undertaker of the overflow risk and it trend in the financial system by the means of double comparatives,while other relevant research focuses on the qualitative analysis in the area of shadow banking risk.It will also optimize shadow banking structure and manage its risk in order to promote shadow banking quality and maintain the financial system security,which based on the differential regulation measures of the systemic risk spillover effects of the sub-categories in China's shadow banking system.The deficiency of this paper is lack of data and information availability,especially on getting some shadow banking and non-listed SME sample data.It is also difficult to strip non-shadow banking business from the shadow banking financial institutions accurately,which would be improved in the future with the sophisticated shadow banking research and data disclosure.The future outlook of this paper which has the advantage of sufficient data samples can be shown as follows:the shadow banking research extends from "quality" to"quantity" and "price",which focuses on making the size and growth of the whole and partial(for business category or geographical area)shadow banking within a reasonable range and sets the reasonable interest rate for the shadow banking financing business;moreover,some tracking study that how the shadow banking makes effect on economy,financing and other fields under the background of tighter regulation will be done,so that it can continue improving the research of shadow banking.