The Effect Of The Development Of China’s Shadow Bank On The Transmission Mechanism Of Monetary Policy

Since 2008, the United States subprime mortgage crisis caused a global financial crisis, exposed the shadow banking to the destructive force of the stability of the banking system, caused the widespread attention at home and abroad, generally believe that the rapid development of the shadow banking is the main reason for the occurrence of the crisis, financial circles began to reflect on financial supervision and the financial system has defects, the strict supervision to limit the excessive expansion. China’s shadow banking is the product after the 2008 financial crisis, despite a late start, but with the deepening development of economic and financial innovation products, the demand of financing are more and more, and the rapid development of the size of the shadow banking, increasing in importance, due to the shadow banking system free from outside the scope of regulation of the central bank, seriously interferes with the effect of China’s monetary policy, especially the shadow banking system credit creation function, weakening the effect of the implementation of the monetary policy transmission mechanism. Therefore, this article will probe into the study of the shadow banking system and the internal relation between the transmission mechanism of monetary policy.Firstly, after the detailed analysis of the shadow banking system in our country related theory, this paper seriously shadow Banks in China were summarized and the cause of rapid development, characteristics, and classification of shadow banking products introduced to our country. Then,in theory, further study of the development of China’s shadow banking system influence on monetary policy transmission mechanism, respectively from the interest rate channel, credit channel, balance sheet channel and exchange rate channel explores the implication of the shadow banking system in our country the mechanism of the monetary policy transmission mechanism. Finally, by building the VAR model, using stationarity test, lag order test, co-integration test, granger causality test, unit root test and impulse response analysis method,test results show that the existence and development of China’s shadow banking has weakened the effect of monetary policy transmission mechanism, then put forward some policy suggestions to optimize China’s monetary policy.