The Research On The Effect Of Shadow Banking On The Financial System Stability In China

In recent yeas,with rapid growing scale,China’s shadow banking has become an important part of financial system. As one of the important creation of financial innovation, Shadow banking has double effects on the financial system stability:on the one hand, it’s a huge challenge for financial system stability that shadow banking influences the macro-control measures, weakens the effect of monetary policy,also because of its high leverage and opacity,internal risk transfer to the financial system;on the other hand,shadow baking provides money to finance and contributes to the real economy.So it’s more conducive to the financial system to guide shadow banking become a legal indirect financing channels to contribute to the real economy.After the mechanism analyst, the use of2004-2013annual data to measure of shadow banking and financial system stability, and by establishing a model to empirical research the relationship between them. Results found that the scale of the shadow banking and financial system stability appears as a kind of inverted U shaped relationship, shadow Banks relative size is less than48%, with the enlargement of the relative size of the shadow banking, financial system stability; After the relative size of the shadow banking is more than48%, it continued to expand the scale of will to cause a decline in the stability of the financial system.The paper points out that moderate developing of shadow banking should be allowed,government cannot isolated, partial, negative say no for the presence of shadow banking. But it must properly handle the relationship between the formal financial system and the shadow banking, strengthen the monitoring of the shadow banking scale. To ensure regional, systemic financial risk does not occur then threaten the financial system stability, its best to establish standardized shadow banking supervision system from three aspects:standard business outside the watch, form the shadow of the special financial regulation coordination committee, accelerate the construction of folk loan legislation.