Study On The Effect Of Shadow Banking On Commercial Banks In China

The term of "shadow banking" is widely known to us because of the outbreak of global financial crisis from2007to2009. In recently years, the study of shadow banking system is emerging at home and abroad. With the rapid development of Shadow banking in financial system, it becomes a system which could parallel to the traditional commercial banking. Accordingly, the shadow banking system’s acting force on the traditional commercial banking is becoming obvious, and it has both positive and negative influences to the development of commercial banking.This article describes the concept and characteristic of the shadow banking system, and its influence on the traditional commercial banking. On this basis, we defined the scope of Chinese shadow banking and measured the scale of shadow banking in China from1992to2011. Then we examine the impact of shadow banking to the profitability and systemic risks of China’s listed commercial banks. The Empirical results show that the scale of China’s shadow banking has time-lag effect on the profitability of commercial banks. With the increasing scale of shadow banking, it has an improvement on the commercial bank’s profitability, but there is an negative effect cannot be ignored, it could increase the systematic risk of commercial banks. Through this research, we hope that we could learn from international experiences, and eliminate the risk of shadow banking in early period. In the same time, guiding and regulating the shadow banking system is another important aspect. Our goal is to make full use of shadow banking system’s active role and to avoid the negative influences.