The Research Of The Shadow Banking In China And Its Economic Impact

With the joint promotion of financial innovation and the “financialdisintermediation”, the structure of the global financial market is developing towardsdiversification. Financial globalization becomes the general trend of the financialdevelopment. While the global shadow banking system is rapidly expanding,Chinese financial markets cannot resist the innate charm of the shadow bankingsystem with its financing advantages. When the term of shadow banking wasproposed in2007, it quickly raised wide concern of scholars. But when we trace toits source, it’s easy to find that the shadow banking was taking shape as early as thebeginning of the financial derivatives market and in the gray area of regulation allalong. Until the outbreak of the global financial crisis in2008, the global financialregulatory authorities did realize the huge hidden systemic risk of the shadowbanking system. This article bases on the analysis of the formation process of theshadow banking system domestic and abroad and uses empirical research method toinvestigate the effect of the development of the shadow banking on domestic realeconomy. Finally, by drawing the basic shape of foreign financial regulatory model,this paper bases the domestic present status of the regulatory to propose policyrecommendations to the shadow banking supervision to guide the shadow bankingfully play its role in promoting financial development while avoid its financial risk.This paper consists of six chapters:In the first chapter, this paper introduces the background and significance of thetopic, and briefly elaborates the research status domestic and abroad for the shadowbanking system. Nowadays, shadow banking system in foreign countries has become a mainstay of financial markets. While in China, shadow banking is still in itsinfancy due to the lack of financial innovation and strict financial regulation.Contrast the research situation of domestic and foreign scholars can help to analyzethe future direction of our research.The second chapter mainly summarizes the theoretical basis of the developmentof Chinese shadow banks. According to the official definition, this chapter brieflydiscusses the scope of the domestic shadow banks. By the contrast between shadowbanks and traditional commercial banks, this chapter analyzes the characteristics ofthe shadow banking system in the context of financial innovation and the intricatelinks between emerging Internet finance and shadow banks.Chapter three focuses on the comparison between domestic and internationalshadow banking system. Firstly, it analyzes the history of domestic and internationalshadow banking systems. Then it explores a way out of the shadow bankingdevelopment with the inspiration of foreign shadow banking models. By thecomparison of the difference between domestic and foreign shadow banking systems,this chapter tries to find suitable regulatory measures starting from the existing stateof the shadow banking system in our country.The forth chapter is the empirical section of this article. This paper chooses thescale of the shadow banking system, GDP and Money supply as variables. By themethod of X12to remove the impact of seasonal factors on the economic sequences,this paper builds a VAR model. Then it uses the impulse response function andvariance decomposition to analyze the impact of shadow banks on the nationaleconomy and monetary policy. At last, it uses the model to estimate the extent ofthese effects.The fifth chapter focuses on the regulation of shadow banking system. After theoutbreak of the financial crisis in2008, the supervision of foreign shadow bankingsystem starts in full swing. Taking the foreign experience financial regulation, this paper puts forward regulation proposal in line with the development of our shadowbanking system and financial markets in order to reduce the systemic risk.