A Research On The Function,Development Direction And Regulatory Framework Of The Shadow Banking System

Caused by the U.S. subprime mortgage crisis, global financial crisis has been going on for thepast five years; the global economy has paid a huge price. However, the economic and social effects of thecrisis and the far-reaching impact are not yet fully apparent; the changing, instability and increasinguncertainties of global economic environment are more complicated, the outlook remains unclear. SincePeople are constantly surprised, panic, angry and questioning, they constantly study and analyze all aspectsof the financial crisis, in order to improve the defects with the reforming of the economic and financialfields, maintain the stability of the financial system. In this process, a new financial term-the shadowbanking system is gradually prominent, causing huge concern in the international community; the incidentbecame the new focus of the field of financial research.This system came into being, developed and expanded which is accompanied by financialliberalization since the60s and70s of the20th century; it has played an important role in the financialsystem, profoundly changed the structure of the financial system, and directly related to the stability anddevelopment of the entire financial system. In the developed economies, the shadow banking system isfinancing large-scale, more than the traditional banking system in the late20th century, the shadow bankingsystem not only has some characters as below: the complex structure, high degree of correlation,individually or jointly composed of the form of bank credit chain, but also changing forms, high leverage,covert operation and alienation from the sight of the monetary and regulatory authorities.In this paper, the author used the knowledge of economics, finance, statistics and otherdisciplines, utilized the method of the combination with theoretical analysis and empirical analysis, andintegrated the method of literature research, quantitative and qualitative research, historical analysis andcomparison research, complied with the idea of questioning problem, analyzing problem and solvingproblem to analyze. Firstly, this paper intended to propose the general background, purpose andsignificance of the research, research methods and the content of the introduction of this article. In this part,the author reviewed and recognized the literature of the shadow banking system, respectively from thedefinition of the main features, the course of development of relations with the financial crisis andregulation in order to summarize the research results and review the status quo. Secondly, by absorbing and drawing the relevant literature, the author clarified about the basic concepts and once again defined thedefinition of the shadow banking system, combined with the operation of the international shadow bankingsystem, analyzed its main functions from the general sense. Thirdly, based on the background of thefinancial crisis, the author studied the potential vulnerability of the international shadow banking system,respectively from the aspect, such as the pro-cyclicality, maturity mismatches, financial innovation,leverage, relevance, regulatory arbitrage, financial security and the possible consequences. Fourthly, theauthor combined with specific composition and the status quo of shadow banking in China to analyze themain function of the shadow banking system and the shadow banking system risk trend, meanwhile, thispaper introduced a financing project of SMEs which has been involved by the author, the authorinvestigated deeply, collected evidences of the enterprise, and analyzed the function in SME financingprocess form micro-perspective of Chinese shadow banking. Finally, the author proposed policies andrecommendations to the regulatory reforming of the shadow banking system. The author introduced themain content of the FSB, of regulatory reform of the shadow banking system in the United States, Europeand Japan, by comparing the similarities and differences, this part summarized and discussed the idea,structure and the main trends of the international regulatory reform of the shadow banking system, in orderto analyze the supervision collision and prominent issues of Chinese shadow banking, drawing oninternational experience and exertion, the author put forward the corresponding policies, recommendationsand combed and summarized up the main points and conclusions of this article.