The Research Of Shadow Banking And Its Regulation

The concept of "Shadow Banking" has been widely used, since it was put forward in2007. In the developed finance market, shadow banking refers to the special network of financial institutions, which can build a bridge of capital flowing from savers to investors by a series of securitizing and secured funding techniques, In short, shadow banking is a series of innovative focusing on asset securitization. While, in China, shadow banking refers to the lack of regulation or regulatory vacuum activities, caused by bank off balance sheet financing products, non-banking financial institutions and none financial institutions.In fact, Chinese shadow banking activity is actually a kind of supplement to the credit.This paper stands on the formation mechanism of shadow banking, demonstrating functions of shadow banking and revealing the negative effect, moreover, it gives a detail review about the risks of shadow banking. This paper focuses on the status quo of shadow banking in China, the demonstration from background to business scale, meanwhile, provides an analogy with the shadow banks in developed countries. Finally, the paper puts forward policy recommendations on the supervision of China’s shadow banks. It suggests that, for Chinese shadow banking supervision, totally repudiate is not a good choice, instead, my opinion is encouraging financial innovation, guiding shadow banking institutions and supervision from the demand of developing. On the other hand, we must draw lessons from international experience and strengthen the shadow banking system and even the whole financial system supervision. We need to speed up the transformation from the concept of financial supervision, promote regulatory department’s coordination to match the present circumstance of cross operation of banking system.