An Empirical Study On The Shadow Banking To Commercial Bank Stability

The outbreak of the 2007 subprime crisis hit the US and the global economy seriously, in the discussion of the causes of the crisis, countries’s scholars have pointed the source of the crisis to the Shadow Banking consistently. Therefore, it has been concerned and researched around the world in the ensuing years since the Executive Directors of US Pacific Asset Management Company proposed its concept. Because of the Shadow Banking produced late in China, and different with the Western Countries mainly engaging in different asset securitization, China’ Shadow Banking born in the traditional commercial banks and it mainly focus on the passage work, so there are many differences between them, for example, in the development background, the leverage ratio, the operating mechanism and the degree of risk, However, due to the interest rate and regulatory mechanisms as well as the growth of financing needs in recent years, Shadow Banking flourished and became an parallel part with the commercial banks in financial system, on the one hand, the development of the Shadow Banking has filled the funding gap of commercial banks and stimulated the reform of profit model and innovation of commercial banks, on the other hand, the Shadow Banking’s high leverage, opaque information and lack of supervision take a threat to commercial bank’s stability, at the same time, Wenzhou credit crisis and the emergence of financial products payment problems also sounded a alarm of studying the shadow banking. commercial banks as the core of financial system, its stability determines the safety of the entire financial system, therefore, it is necessary to study the impact of Shadow Banking to China’s Commercial Banks.We use qualitative and quantitative analysis method, and on the basis of sorting out the relevant literature of shadow banks and commercial banks, firstly, we define the concept of China’s Shadow Banking and introduce the important parts of it, thus we will summarizes the characteristics of the shadow banking system, followed we will analyze the enhancement mechanism and weakening mechanisms of Shadow Banking to Commercial Bank Stability, at last, from the perspective of the system and non-system factors,we build a stability’s composite indicator, and using 2002-2013 data we conduct a empirical research and get a conclusion that there is a threshold effect between the scale of Shadow Banking and Commercial Bank Stability, so we can not easily determine that the presence of shadow banking is reasonable or not, but rather we should have a dialectical view of the development of the Shadow Banking, China is in the cut-off point now that the size of the shadow banking plays a different effects on the stability of commercial banks, Therefore, we should take measures to control the scale and risks, playing its positive effect on the stability of commercial banks, guiding it to play a better effect to financial system and economic development.