Legal Issues Study On The Supervision Of Shadow Banking In China

The subprime mortgage crisis of United States in2008transferred into a globalfinancial crisis and made the new word "shadow banking" widely known during onenight. After the financial crisis, regulators began to realize the vital role played byshadow banks in the outbreak and spread of financial crises. Shadow banks causedextensive damages to the stability of financial markets in United States and thenaccelerated the transformation to a global financial crisis. Shadow banking is one ofthe key triggers to the global financial crisis, and the free of the traditionalcommercial banking supervision system is what the supervisory authority in this arealacks. Since then, the United States-led foreign developed countries made measuressuccessively, to pay more attention to the shadow banking by making up theregulation leak and enhancing the supervision of shadow banking. Despite the shadowbanking system has gradually been incorporated into the regulatory framework invarious countries of the world, the speed and scale of its development in recent yearsstill should be reckoned seriously, we should be on heightened alertness for the rapiddevelopment of shadow banking and its adverse effects on the financial system, andcontinue to make effective regulations.The formation of Shadow banking forms varies around the world with a regionaldevelopment characteristics. Compared with the other countries, the shadow bankingin China started late with smaller and relatively simpler structure. With the deepening of financial innovation and the developing of financial derivatives market, themanifestations of the shadow banking system will become more diverse and theloopholes of regulatory will increase, which bring more challenges to the regulatoryauthorities. The different academic connotation of shadow banking is the entry pointof this paper and the concept and essence characteristics of shadow banking are alsodefined in this paper. This paper also makes analysis on the regulatory status andpolicy based on the relatively large and important five manifestations of shadowbanking, and then gives the conclusion of the regulatory problems and advices on thelegal supervision. Specifically, this paper is divided into four chapters below:First chapter mainly defines the extension of shadow banking and summarize thecategories of shadow banking in the107th file of State Department. The several largerand more important manifestations are also detailed introduced in this chapter. Thispaper then makes classified analysis for shadow banking based on the essencecharacteristic of banking.Chapter two focuses on the regulation status and policy about the important fivemanifestations of shadow banking described in the first chapter. There is research onthe factor to cause shadow banking risks and conclusion of general issues in variousforms supervision to seek out deficiencies in the shadow banking regulation.Chapter three classifies the mode of shadow banking supervision in foreigncountries. Through the comparison of financial supervision system reform betweenthe United States and the United Kingdom, especially in the contents of the shadowbanking supervision, this paper finds that the establishment of a unified coordinationmechanism for monitoring is in common, which has also expanded the scope ofregulation as well as the better protection of financial consumers interests. Thelegislative experience in the Dodd-Frank Act of United States is a good reference forChinese legislative supervision.The last chapter is on the basis of the foregoing three chapters and the regulationproblems mentioned in chapter two, combining the foreign advanced legislativeexperience in chapter three with financial practices in China. The author puts forwardsome policy suggestions for perfecting the shadow banking supervision, which is mainly about the legislative strengthening on the supervision of shadow bankingwhich includes the establishment of a comprehensive legal regulatory systems, thefurther clarification of regulatory body in legislation, the improvement of networkfinancial regulatory legislation, the strategies for strengthening financial consumerprotection legislation and the enhancement of regulation on shadow banking in law.