Research On The Influence Of Shadow Banking On Monetary Policy

With the change of financial market environment, the financial business kept the rapid development and continuous innovation.The development of the shadow banks has been rapid. Commercial banks are no longer the only credit creation financial institutions.Shadow banking can provide a lot of liquidity to the market,which can reduce the size of commercial bank credit and make the central bank’s regulation and control weakening. M2 can not represent the real liquidity and Cannot be qualified as an intermediate target.This will increase the uncertainty and time lag of monetary policy transmission,which can increase the difficulty of monetary policy to control the macro economy.Therefore, with the rapid development of the shadow banking, this article make use of the qualitative and quantitative analysis to research the effect of shadow banking on monetary policy.Because of its huge systemic risk,Shadow banking has become the focus of regulatory authorities in many countries. The biggest risk facing China’s financial market in the past five years.So it is necessary and important to clarify the connotation of the shadow banking and to guard against the risk of the shadow banking.Therefore, this paper firstly makes a systematic study on the structure of shadow banking and the pattern of credit creation.The shadow banking include the commercial bank balance sheet business, trust companies and other non-deposit financial institutions and private finance, which has similar commercial bank credit creation function.The reason for the rapid development of shadow banking are Financial institutions’ demand for profit and funds.Secondly, qualitative analysis the impact of shadow banking on monetary policy transmission mechanism, objectives and tools.The main reason for the deviation of the target of the monetary policy is the shadow banking, which causes the diversion of the commercial bank deposits and the decline of the credit market position and weak the effect of the central bank through commercial banks to control the macroeconomic.Thirdly, by constructing the VAR model and using impulse response analysis and variance decomposition analysis, the influence of shadow banking on the monetary policy transmission mechanism and objective is analyzed.From the empirical results, the shadow banking plays a alternative function of traditional commercial bank, can decrease the size of commercial bank credit, also promote CPI and GDP. In the short term, it will reduce the money supply, but in the long term, it can increase the money supply. Finally, On the basis of the previous studies, this paper puts forward effective measures to deal with the challenges brought about by the shadow banking on the smooth implementation of monetary policy.The paper proposed that regulator strengthen the shadow banking supervision, establish the shadow banking information statistics system and improve the shadow banking collateral manageent.