The Research Of Risk Conduction Of Shadow Banking System And Regulation

Nearly thirty to forty years,by setting reserve to strengthen to the traditional banking supervision and the capital adequacy ratio,the central bank objectively want to maintain financial market stability,but this also makes the traditional bank increasingly unable to meet the needs of the development of the social economy and foreign trade. In the near decade,the worldwide innovations of financial product and regulatory rule changes make the shadow banking system be with comparative advantage to the traditional banks.the existence of arbitrage opportunities also accelerated the Shadow Banking System,the development of the global financial system appeared a fundamental change,leading to a fallen traditional Banking market share.According to the definition of the shadow banking system and the inner operating mechanism,a lot products of financial innovation are with deficiency in itself.when the economic situation is in adverse situation, the shadow banking system’s vulnerability and its contaction with other financial institutions generally have risks conductive to other financial institutions.Widely hailed as financial innovations of securitization and related credit technology makes financial institutions create conditions to carry out the shadow banking. Shadow Banks for credit at the same time perioded with traditional bank with similar transformation.the operation of many shadow banking institutions and activities intertwined with the traditional Banks and insurance institutions is the backup of credit relationship.Recessive guarantee special purpose vihicles and asset management subsidiary are directly on the Banks of the ownership of the securitized assets on the balance sheet,and the credit will be provided by the insurance company.Compared with the traditional banking system supported by the public sector to guarantee safety,part of the shadow banking system liquidity and credit support provided by the private sector, however, once the solvency of the private sector providers has been questioned, the confidence which supports the shadow banking system stability would vanish.Because of the related business in the shadow banking system is through the Fed’s discount window and the federal deposit insurance corporation (FDIC),which has clear and direct public resources to support liquidity and tail risk insurance. During the subprime crisis, the collapse of the shadow banking system has fully exposed the hidden accumulation of liquidity and credit tail risks, and thus formed a systemic crisis. Financial innovation inherented with instability and shadow banking institutions with high leverage also brought great fragility to the entire financial system, and become the main driving force of the global financial crisis, which received extensive attention of academic and regulatory authorities, is considered to be the important driving force of the outbreak of the sub-prime crisis in the end of 2007.At home and abroad, the latest research on shadow banking size and risk measurement, each of them have advantages and disadvantages. According to China’s reality, it is important to select the appropriate macroeconomic variables,.from the perspective of money supply, economic cycle and the impact of the economic structure of shadow banking system in our country,Taking the incremental index quantitative of the shadow banking system in our country, the shadow banking system and money supply is with positive correlation, and is cyclical to China’s economic cycle as well as compatible with economic structure.Although regulatory authorities made an effort to the shadow banking system regulation in China,and points out that China’s shadow banking risk remains under control, but there is no denying that China’s shadow banking scale is huge, the risk of the shadow bank system has become a threat to financial stability, more effective regulation measures taken by the regulatory authorities becomes more and more important.Compared with the situation abroad, the domestic form of securitization and repurchase activity is also obviously in different operation mode. Academic circles of our country hold in controversial sense of the shadow banking system,but the study of foreign academics offers regulators in China a new way for the shadow banking supervision, and provides many worthy experience of learning. Regulatory authorities in our country should aware that there is a real risk of the shadow banking system in China (shadow banking financial institutions),and need to change their focus on the relation between financial institutions and the shadow banking regulatory mode,set out from the shadow banking behavior.focusing on trust funds, financial products such as the influence of the financial innovation products of shadow banking behavior. On this basis to strengthen cooperation with domestic and international relevant regulators,combined with other measures, effectively reduce the adverse impact of the shadow banking behavior of financial institutions in China.