The Shadow Banking Impact On China’s Economic Development And Policy Recommendations

Rooted in the subprime mortgage crisis on Wall Street, in a relatively short period of time across the global economy, import and export decline, businesses have closed down, unemployment in problems such as frequency, thus caused a worldwide recession. It is for this global financial crisis, pushing shadow Banks into people’s horizons, gradually become the focus of attention of academics and financial regulators and became a "culprit" of the financial crisis.The shadow banking system with financial liberalization in 60 of the last century, since the 70’s development and expansion. After 40 years of development, the scale of the shadow banking in the expanding, function are also growing, and gradually become an important part in financial markets, the direct relationship between the stability and development of the entire financial system. Shadow banking through the corresponding institutions and business activities, the exercise of the partial function of traditional Banks, but free from the regulatory system, and has various forms, highly leveraged, operation is not transparent and so on characteristics. In recent years, our country of the trust, bank off-balance-sheet financing business, small loan companies, private lending and other forms of shadow banking development is rapid, large scale. According to official statistics, as of late December, 2013, our country’s shadow banking scale up to 28 trillion yuan, to the monetary economy and real economy in China has important influence.Article using the combination of theoretical analysis and empirical analysis research methods, covers the subject knowledge such as economics, finance, econometrics, and follow the questions- analysis problem- to solve the problem to the shadow banking discussion research. We think that shadow Banks stemmed from the United States, the article first introduces the foreign origin of the shadow banking development, experienced three stages of development, forms and characteristics, through the comparison, you can see that shadow Banks in China is different from western countries, China’s shadow banking is essentially due to the marketization of interest rate, financial deepening reform, has a strong institutional characteristics, so we also call it "shadow banking" Chinese style.Then, the article based on the shadow banking in our country, discusses in detail its development reasons, composition and size. And exist in our country at present the main kinds of shadow banking institutions, for example, part of the traditional bank off-balance-sheet financing business, private lending, trust companies, such as small loans, the shadow banking institutions in the process of development, can improve the residents’ property income, widen the channel of the development of small and medium-sized enterprises, optimize the distribution of financial resources, to a certain extent promote the development of our country’s economy. However, everything has its duality, shadow banking is also a "double-edged sword". On the one hand, the shadow Banks can service for small and medium-sized enterprises, promote the development of national economy; On the other hand, because of the lack of corresponding regulation, shadow Banks a lot of business operation of non-standard problems: improper trading, manipulation, and so on, all of China’s financial market caused bad influence safety and economic stability. In order to more intuitive that shadow banking’s influence on economic development, the article adopted the method of empirical analysis, based on the VAR model this paper discusses the shadow Banks to GDP growth and the impact of monetary policy. Finally it is concluded that the shadow Banks to some extent, promote the economic development at the same time, also for China’s monetary policy effectiveness caused certain interference effect of the conclusion.Finally, after the comprehensive analysis of the shadow banking system, this thesis mainly introduces the current situation of the regulation of the shadow banking system, summed up how China should strengthen the supervision of shadow banking. At the end of the article, put forward our country should improve the financial credit system, regulate private lending, to promote market-oriented interest rate reform policies, financial innovation, so as to promote the development of shadow banking.