An Empirical Study Of The Impact Of Shadow Banking On Commercial Bank Stability Coefficient

With the accelerating financial innovation, as an important product of financial innovation,size of shadow banking expand rapidly,it has played an important role in the organic part of China’s financial system. However, the existence of the shadow banking’maturity mismatches and high leverage characteristics make it more risky, likely impacting on the financial system. Currently commercial banks is still in the dominant position in China’s financial system, the stability of the commercial banking system is bound to have a huge impact on our financial system. Therefore, the study on the impact of the shadow banking system on the stability of our commercial banks has an important significance for the stability and development of the national economy and China’s financial system.This article review the earlier scholars’researches, on the basis making a more comprehensive and systematic analysis of the double impact of the shadow banking system on stability of our banks with qualitative and quantitative analysis method both. Annual data from 2002-2012 is used to make a nonlinear regression model to measure the impact of Chinese shadow banking system on the stability of banks,using OLS method. Studies have shown that a threshold effect of the shadow banking size and stability of the banking system exists. When the size of the shadow banking below the threshold, to expand the scale of the shadow banking will improve the stability of the banking system, on the contrary, the stability of the banking system is reduced. Thus, the paper points out that you can take the following measures to avoid the negative aspects of the impact of the shadow banking system on the stability of the banks:change concepts in the financial services, give right to private financial institutions as soon as possible. establish shadow banking supervision system, improve its information transparency, strengthen the supervision of its business activities and reduce leverage on shadow banking.accelerate marketization of the interest rate, making the interest rate play more role in the market.strengthen the formal credit channels to increase credit support for private enterprises and individual industrial, innovate business way, improve system security, thereby reducing reliance on funding shadow banking. strengthen the supervision of real estate and other root causes of risk.