Study On The Shadow Banking System Based On The Shanghai FTZ

Since the United States subprime mortgage crisis, scholars have begun to conduct extensive research about shadow banking system. Combined with the actual financial products and different definitions of foreign scholars, this paper defines shadow banking system as three forms:shadow banking business of formal banking system, credit intermediary financial institutions and civil financial activities. The shadow banking system creates market liquidity through financial innovation, but not subject to the formal financial regulations.It is undeniable that shadow banking system is an inevitable result of financial development and innovation. As a useful complement to the traditional banking system, it plays a significant role in enriching the channels of resident investment and serving economy. With the constant expansion of the shadow banking system, however, the risk also attracts wide attention. The risks of shadow banking system include maturity mismatch risk, leverage risk, financial fragility, magnified systemic risk and so on. In tackling the issue of shadow banking system, international experience is to establish the macro-prudential supervision, expand the scope of regulatory objects, and clear regulatory targets.Based on China (Shanghai) FTZ, this paper tends to study the impact of financial liberalization on shadow banking system. According to current Shanghai FTZ overall plan and the development of the Shanghai FTZ, this paper find the answers about how to avoid the shadow banking systemic risk under the Shanghai FTZ framework, providing the reference of resolving the shadow banking problems in nationwide. The article is divided into the following four sections:The first part introduces background and significance of this paper, reviewing literatures both at home and abroad, presenting the framework and research methodology, innovations and shortcomings.The second part defines the shadow banking system, combines1998to2012of statistics data for estimation, and analyses three forms:shadow banking business of formal banking system, credit intermediary financial institutions and civil financial activities. Through analysis of different performance and causes, this part describes positive and negative effects of shadow banking system on financial market.The third part combines the relevant laws and regulations of capital account, currency cross-border usage and marketization of interest rate with shadow banking system. It focuses the effect of Shanghai FTZ financial market liberalization on the shadow banking system:opening capital account broadens the financing channels and reduces reliance on the shadow banking system; currency cross-border usage enforces the construction of capital market and solves the problems of shadow banking system; marketization of interest rate regulates the behavior of shadow banking system.The fourth part puts forward the corresponding measures on the basis of former parts: firstly, accelerating the opening of financial markets and guiding the healthy development of finance. secondly, tightening regulation of shadow banking system and making it into the macro-prudential supervision system; thirdly, improving the risk warning and monitoring mechanisms; last, establishing statistical standards and increasing information transparency.