Research On Legal Supervision Of Shadow Bank

After this round of financial crisis， the Shadow Banking System， whichpromoted the U.S. subprime mortgage crisis, received wide attention and became afrontier issue both in finance and law. The concept of shadow banking was originallyproposed by Paul Mccully, executive director of Pacific Asset ManagementCompany.The shadow banking system mainly include investment banks, hedge funds,private equity funds, money market funds, bond insurance companies, structuredinvestment vehicles (SIVs) and other non-bank financial institutions.The first chapter introduced the concept of the shadow banking, and aimed atexplicating the object of legal regulation, and limited the scope of this article. In thischapter, different definitions in available literature of shadow banking are collated,and the author determined the connotation of shadow banking base on the analysis ofits legal nature, and then, summarized the epitaxial of shadow banking.The second chapter describes the risk characteristics and the impact of theshadow banking. Bases on introducing the operating modes of shadow banks, whoseoperational activities is using maturity mismatch and wholesale model, we can reachthe conclusion of their characteristics, like high leverage and low transparency. Thematurity mismatch always caused systemic risks easily, and the high leverage wouldcause liquidity risk magnified. If the enlargement liquidity risk passed to the bankingsystem through the financial markets, there will be a serious threat to the stability ofthe banking system. The shadow banking system has some positive senses to acountry’s financial and economic, which are manifestations of regulatory value; andthe negative impacts of the shadow banks reflect regulatory necessity. The Chapter III presents the current legal supervision of shadow banks in China.Compared with the shadow banks in Europe or United States, the business of shadowbanks is relatively simple in our country. In China, trust companies, financial firms,small loan companies and other non-bank financial institutions engaged in creditintermediary business. Overall, the shadow banking system in China is still in theprimary stage of development, which has not form a mature asset-securitization creditchain. Currently, the regulation norms of china’s shadow banking are also scattered insome regulations or files, which means there haven’t any formation systems in ourcountry.Based on many regulations, documents and reports promulgated in the past twoyears, Chapter IV organized the regulatory reforms of the United States, the EuropeanUnion and the Financial Stability Board. In this paper, a brief summary of the currentinternational shadow banking regulatory reform initiatives is given. Regulators arefocus on these four aspects: expand the scope of regulation, improve regulatorystandards, and risk isolation, prevent moral hazard.The last chapter (Chapter V) consists two parts, is some ponders about the legalregulations of shadow banks in China. In first part, the author analyses the presentsituation of china’s legal supervision and presented several problems. In the secondpart, the author tried to put forward some suggestions about build and improveChina’s shadow banking legal supervision system.