The Influence Of The Shadow Banking System On China’s Monetary Policy Effect

Since2008, the international financial crisis spreading across the globe, the large number of financial groups such as lehman brothers, Illinois, Nevada bank and Washington mutual bank failure. Europe’s debt crisis escalated, as Greece, Portugal, Spain and other countries have been sovereign credit rating downgrade, and European stock markets tumbled unceasingly, the whole region into a crisis in the European Union. Shadow banking is considered to be the outbreak of the financial crisis developed, and its inherent fragility and regulatory gap brought a huge challenge to financial stability, which received extensive attention of all levels of government and academia.In our country, the financial market was still in the stage of development, financial innovation compared with western developed countries there is still a certain gap, the shadow of the Banks in China also presents the nature of the Chinese characteristic. Did not exist in our country in general shadow Banks and shadow Banks in China are mainly with reality of the bank but without the name of the bank of financial institutions and financial business, these financial institutions, including the private lenders, pawn shops, private equity funds, small loan companies, financing guarantee institutions, rural capital mutual aid organizations, etc.The shadow banking system in our country is under a state of rapid development, so the study of its effect on monetary policy has important theoretical and practical significance. One hand, monetary policy is the core of money market, the post-crisis era, the economies of the economic recovery and to achieve the goals of the macro, monetary policy has become an important tool. Through exploring the shadow banking to the monetary policy influence, stimulate the ponder to the existing monetary policy by the government, constantly adjust the direction of monetary policy to make it adapt to the economic development of China, thus establishing a mature and stable system of monetary policy. The other hand, based on the research of the shadow banking system, we can use its good service to our country’s financial markets, to avoid the bad side to stabilize the development of financial market in China, using its powerful financing capabilities, to fill the shortage of the our country commercial bank financing, vigorously promote the financial innovation in China, for the release of a large amount of risk, looking for effective monetary policy to control from the source to resolve the existing problems, and to maintain the stability of the financial system in China.In this article, through the combination of theory and empirical way, this paper expounds the shadow banking, and the effects of monetary policy of our country. First, this paper introduced the concepts of shadow Banks, including the definition, classification of the shadow banking and reasons, let people understand the connotation of shadow banking, for later foreshadowing; Of shadow Banks listed in detail, and theoretical analysis of the monetary policy effects in our country, through monetary policy tools "three magic weapons and the ultimate goal" two aspects, and theoretically concluded that shadow Banks will weaken the monetary policy tools "three magic weapons force", is not conducive to the realization of the ultimate goal for monetary policy in our country; Furthermore, through empirical method to confirm the previous theoretical analysis, this paper established two VAR model, not to join the shadow banking index in model1and model2to add the shadow banking index, by comparing the two models of impulse response and variance decomposition results, also concluded that shadow Banks has weakened the quantitative effect of monetary policy tools, specific to weaken the open market operations and the enforcement of legal deposit reserve, and is bad for our country to achieve the goals of monetary policy in the end, this is consistent with theoretical analysis. Finally, according to the previous conclusions, respectively in the development and perfection of the shadow banking system is put forward on the monetary policy response countermeasures and Suggestions.Innovation point of this article is:most are based on the research of perfecting its regulatory, or from the financial stability study, study from the perspective of monetary policy. Monetary policy is, however, light the direction of development of China’s macroeconomic stability, this article will shadow banking and monetary policy, both for innovations. Based on the special national conditions in our country, through the theoretical and empirical combination of analysis of the effect of the shadow banking system to our country monetary policy influence, to the appropriate development of China’s shadow banking, consummates our country monetary policy provides a realistic basis.Due to the limited level of the author, in this paper, there are still some deficiencies: first,There are some measure errors in the scale of the shadow Banks, due to the folk lending, underground finance, private equity funds and other business also occupies the shadow Banks certain proportion, and these data can’t get, so will cause the statistical error; Second, on the index selection, such as monetary policy tools rediscount rate in the "three big magic weapon", because do not representative, not added to the model, and the monetary policy intermediate target, due to the nature of the model itself failed to join the model is analyzed, and the research of these variables and the relationship between the shadow banking has an important meaning; Third, in this paper, the study of monetary policy is not enough in-depth, due to the grasp of the monetary policy and the shadow banking theory is not enough thorough, thorough analysis, also need to further improve in the future.