Research On Risk Supervision Of Shadow Banking System

The shadow banking system, as one of the non-banking financial institutions, is primarily designed for profit-generating through trading of derivative instruments while maintaining the traditional bank operations. It is criticized as the initiator of the asset bubble of the subprime financial crisis in 2007. By integrating with the basic structure, operating mechanism and risk management of the American shadow banking system, the article pointed out the risk regulation problems in China and provided complemented counter plan.First of all, the article explained basic principles and theories of the shadow banking system and described its development and importance to the global financial industry. Then, it analyzed the system's operating mechanisms and impacts during the financial crisis, criticizing the ineffective of the American regulation authority and confirmed the necessity of the regulation reform. Moreover, with the actual situation of Chinese financial market, the article pointed out the unique form of Chinese shadow banking system and its potential risk management problems and proved the defect of VaR model by utilizing empirical analysis. Finally, the article performed the counter plan of consummating Chinese shadow banking system through the reinforcement of risk management of governmental financial institutions and the normalization of the business between commercial banks and shadow banking system.