Study On The Economic Inspirations And Supervision Of Shadow Banking In China

Domestic and overseas researchers keep discussing about the crisis of internationalfinance since its outburst in2008, and the little-knownconcept “shadow banking” startsto be discovered. The development of shadow banking has been ignored by economistsand specialists before the crisis, and the authorities only strengthen the supervision onthe classic financial organizations and its business, without paying enough attention onshadow banking. The shadow banks are considered as the origin of the crisis andinfluent the traditional banking system with negative effects and impact. After thenmany people realize the blind spot, but its risks has been overestimated. However,shadow banking could be the indispensable component of the financial market andboost the development of economy if it has been well-understood. As the financialmarkets pursuit low cost and easy fund resources when the global excess liquidityoccurs, shadow banks play a more important role in it. Shadow banking is changing thestructure of financial system and booming the financial markets.Due to the larger scale and simple operations of shadow banking, and the low levelof openness in financial market, shadow banking system in China with Chinesecharacteristics is different from other countries. China should only use the experiencesof western countries for reference but not imitate them for supervising the shadowbanking system. The economic significance of shadow banking organizations and theirbusinesses classified by the supervisions has been carded, then the exposed andpotential problems of supervision has been elaborated by putting forward the reasonablesuggestions to relative authorizations, thus to complete the strategies of shadow bankingsupervision in China.The qualitative analysis and the quantitative analysis have been combined togetherto have a comprehensive and systematic study of the shadow banking and itssupervision. Firstly, the related concepts of shadow banking has been dialyzed anddemarcated by reviewing the relevant literature, and the relationship between shadowbanks and commercial banks has been explained. Secondly, the current status ofdomestic shadow bank development and the problems found in supervision have beenillustrated, and summarising the relevant laws and regulations, followed by the data statistics of shadow banking scale ended at July2014. Thirdly, the VAR model has beenapplied on studying the influence of the economy of China by the development ofshadow banking, which is empirical analysis based on the monthly data from January2003to July2014. Finally, elaborate the suggestions for overall supervision of thedomestic shadow banking, and specific supervision suggestions for organizations andbusinesses.By analysing the theories of shadow banking, it can be resulted that the shadowbanks and their businesses are lacking of creativity and poor supervision. Empiricalanalysis concluded that the development of domestic shadow banks could promote thegrowing economy, and need to be guided and supervised by government andsupervision department. Creatively, the classification of shadow banks and businessesdepends on the types of supervision department, detailed suggestions has been made forthe classified organizations and businesses to complete the supervision of the entireshadow banking system.