The Influence Of The Development Of Shadow Bank On The Effectiveness Of China 's Monetary Policy

Broadly speaking, the shadow banking system is a call that all the credit intermediary outside the traditional baning system, it drifts away from the supervision system,but in fact, they exercises the functions that similar to the traditional banking system. With the rapid development of the shadow banking, to some extent, it has changed our financial situation of over-reliance on the banking system, met the financing needs of the real economy, enriched and broadened the investment channels for residents and enterprises. However, because the shadow banking is not easy to monitor and to avoid regulation, and its unique operating mechanism has been independent of the traditional scope of monetary policy, it inevitably affects the formulation and implementation of monetary policy, to a certain extent will weaken the effect of monetary policy. Therefore, this paper is of important theoretical and practical significance to study the effect of shadow baning on the effectiveness of monetary policy.We first give the definition of the shadow banking based on the summary of international explanations of shadow banking system, and theoretically analyze the mechanism of shadow banking for monetary policy, and then using China’s annual date from1984to2011. We select GDP and retail price index respectively on behalf of the ultimate goal, we study the effect of shadow banking on the effectiveness of China’s monetary policy using VAR model. The results of the study show that the development of the shadow banking could influence the output and price in a short term, affecting the impact of the ultimate goal of monetary policy. From the size and direction, the shadow banking could explain12.6%of economic growth, playing a positive role in promoting the economic development; Meanwhile, shadow banking has helped rising prices, which accounting for18%, thus affecting the price control. Finally, we give the corresponding suggestions on the regulation of the shadow banking system and perfection of the monetary policy.