A Study On The Regulatory Regime Of The Chinese Shadow Banking System On The Perspective Of Financial Law

Although the operating mechanism of Shadow Banking is not in the name ofCommercial Bank, it acts as Commercial Bank. Shadow Banking contains positiveand negative effect. In the area of providing service of real economy and expandingfinancing channels, Shadow Banking plays a positive effect. However, because of itsinherent fragility, such as the System risk that may cause and its Regulatory Arbitrage,the Shadow Banking has a negative effect on the financial stability of the entireinternational community. After the Subprime Mortgage Crisis, the financial powersincluding the U.S. start to attach importance to the Shadow Banking. All of themconsidered that the lack of supervision on the Shadow Banking is the major reason ofthe Subprime Mortgage Crisis. After this, the FSB, the EU, the U.S. and otherfinancial powers begin to strengthen the regulation of the Shadow Banking throughthe appropriate legal reforms.In contrast to China, now there are also exist some of credit intermediation andactivities which are outside the traditional bank regulation and play the function ofcredit creation. In January2014, the Notice on the strengthening of the ShadowBanking regulatory issues launched by the State Council had attracted the attention ofthe whole society. The Notice makes a simple classification of the Shadow Banking,and poses a basic principle and roughly idea of the regulation on the Shadow Banking.However, it doesn’t make respond on how to define the Shadow Banking. Based onthe above background, this thesis starts the research on the Regulatory Regime of theShadow Banking on the Perspective of the Financial Law. There are five chapters in this thesis. The Chapter One indentified the intensionand epitaxial of the Shadow Banking, including the FSB, the FCIC and the FederalReserve of New York in the U.S. and the EU. The Chapter One defines the ShadowBanking System in China as well, and then summarized the commons and differencesof the Shadow Banking in China and Overseas.The Chapter Two focused on the generation logic of the Shadow Banking in theuse of the theory of financial depression, institutional change and financial innovation.The author consider that the generation logic of the Shadow Banking include thestate control of the interest and credit, the state legal reform, and the financialinnovation of the Shadow Banking to avoid regulation and reduce transaction costs. Itshould be noted that discussing the generation logic of the Shadow Banking is thetheoretical foundation for the construction of subsequent regulatory system.The Third Chapter focused on the inherent flaws of the Shadow Banking in theuse of the method of economic analysis. The negative economic effect of the ShadowBanking include the liquidity shortage caused by the maturity mismatch, the inherentsystem risk and the economic losses caused by the information asymmetry andregulatory arbitrage.On the basis of the above analysis, Chapter Four mainly discussed the legalreform in the major financial powers and international organizations like U.S., FSBand EU to regulate the Shadow Banking in the method of comparative analysis.Firstly, the author analysis the regulatory legal system in the FSB, including theregulatory policies on the Shadow Banking institutions, and on the securities lendingand repurchase in the Shadow Banking Activities. Secondly, the author induced theregulatory measures on the Shadow Banking formulated by the U.S. Dodd-Frank Act.At last, the author analyses the major regulatory policies on the Shadow Banking inthe EU and the UK. This Chapter plays a nexus role in the whole thesis.Chapter Five is the innovation of this thesis. Combined the above analysis, thisChapter discuss the regulation legal system of Chinese Shadow Banking on thePerspective of financial law. First of all, the author analyses the status quo and defectsof the legal regulation on the Chinese Shadow Banking. Second, the author discussedthe legal basis of the Shadow Banking regulation on the three aspects of regulatoryboundaries, regulatory path and values. At last, the author discourse how to constructthe legal regulatory framework on the three levels of regulatory institution, regulatorycontent and the subject to the regulation.