Research On The Impact Of Shadow Banking System's Credit Creation On China's Monetary Policy

In 2007, shadow banks functioned as traditional banks had generated a heated controversy after the US sub-prime crisis, which drawn academia,practice and the authorities'increased attention.There is no consensus on this issue under the consideration of different financial environment.As for China shadow banking system is generally regard as a credit medium system independent of formal banking system, consist of institutions and businesses which provide liquidity and credit conversion service but may led to systemic risk and regulatory arbitrage.In the long run, China's financial sector is going towards opening step by step, so it's indispensable to improve the financial operation system.In recent years, the scale of China's shadow banks boom. According to the statistics of the people's bank of China, in 2014, RMB loans accounted for the proportion of social financing scale is 59.59%, which shows that the financing channels out of the traditional banking system play a more and more important role in the process of social financing.Because of the close relationship between the sub-prime crisis, the financial innovation and the shadow banking system, any financial system has to learn from it and define the direction of the future financial innovation if continues to develop.This paper analyze the relationship between the development of China's shadow banking system and the monetary policy theoretically and empirically focus on the perspective of its credit creation, combined with its most typical operational mode:launch--distribution.First of all, introducing the definition of the shadow banking system home and abroad, sorting the generation and development process of it.Secondly, combined with the reality of our country, investigating the credit creation mechanism and credit scale of shadow banking system in China, then analyzing how credit creation of the shadow banking system impact on our country's monetary policies specifically.Finally, it analyzes the influence of shadow banking system on the monetary policy in China through VAR Model Analysis with relevant data above and comes to the conclusion that: The credit creation of shadow banking system has an influence on the intermediate and final goal of monetary policy in our country. In the short term, the credit creation of shadow banking system impacts more on Ml over GDP, it also has an effect on monetary policy transmission, weakens the effectiveness of monetary policy, led to the situation against expected results and targets.In the long term, it also plays a role in promoting China's economic development, therefore, optimization and innovation of monetary policy and effective improvement of the shadow banking regulation should be given priority based on the development of shadow banking system. Through this, will it play a positive role and make the financial system better serve the real economy. So it is necessary to turn it from the micro level controls into the macroeconomic regulation system.