The Impact Of Shadow Bank On Financial Systemic Risk In China And The Regional Difference

In the international financial crisis,the shadow bank played an extremely important role in fueling the flames.Therefore,national scholars began to focus on shadow bank and financial systemic risk after the financial crisis.In the context of lacking supervision,the scale of shadow banks developed rapidly in China.Although it meets the needs of financing and development of SMEs,its impact on the stability of the financial system should not be underestimated.And there are some differences in the development of shadow bank and its impact on financial systemic risk due to the differences of economic development,financial development and economic structure.The phenomena such as regional private lending crisis and scandal of HuaXin Trust's financial products indicate that there is a process of accumulation before the outbreak of financial systemic risk,and the crisis is always break out in the most risky areas.Therefore,this paper estimates the size of shadow bank and financial systemic risk in China,the impact of shadow bank on financial systemic risk in China and differences between regions,the transmission path from shadow bank to financial systemic risk and its regional differences.It is of great theoretical and practical significance to reduce financial systemic risk,maintain financial stability and promote economic growth.First,this paper defines the concept of shadow bank and its causes.And on this basis,the paper excludes the shadow banks in the shadow banking system,which is small in scale,low in the rate of bad business or directly impact on the financial system.And thus this paper defines the narrow shadow bank(trust and private lending).And then it measures the size of the shadow bank in China.The paper calculates the scale of private lending with the income and expense unbalance measurement based on previous methods.In order to study the influence of shadow bank on financial systemic risk,this paper analyzes the definition and causes of financial systemic risk.Based on this,the author uses the predecessors' index system and selected 12 indicators in the regional economy,financial system,assets market and institution environment to establish the index system.And then this paper measures the financial systemic risk through the assignment of indicators.In order to further study the transmission path from shadow bank to financial systemic risk,this paper summarizes the mechanism of shadow bank's influence on financial systemic risk based on the analysis of shadow banking characteristics and financial systemic risk causes.Secondly,based on the measurement of the shadow banking scale and the financial systemic risk,the panel data of 31 provinces in China are used to carry out the least squares regression using the CSW and PCSE estimation.The empirical results show that the quadratic scale of shadow bank has a significant positive effect on financial systemic risk,which indicates that there is a threshold effect of shadow bank and financial systemic risk.However,in the regional regression,it is found that the western regional U-shaped relationship between the shadow bank and the financial systemic risk is not obvious.The development of shadow bank is relatively slow in western region where the development of financial system is imperfect.Therefore,the threshold effect of shadow bank and financial systemic risk is not significant in the 10 years of empirical analysis.Secondly,through the threshold analysis,it is found that the scale of private lending and the size of the trust are larger than the threshold in Zhejiang,Jiangsu and Beijing.And the total size of the shadow bank is greater than the threshold in Zhejiang and Jiangsu.This shows the shadow banking scale is in a safe range in China.Finally,by analyzing the thresholds in the regional regression results,it is found that the finer the financial system is,the higher the threshold of the shadow banking scale is,and vice versa.Furthermore,in order to further analyze the cause of the shadow bank's impact on financial systemic risk,this paper,based on the analysis of the shadow bank's impact on financial systemic risk,uses panel data of 31 provinces in China from 2004 to 2014.The cointegration test and the correlation test are used to conduct an empirical study on the shadow bank's path to financial systemic risk.The results show that: shadow banks in China increase financial systemic risk by reducing the rate of NPL ratio,raising house and stock price.Furthermore,in order to analyze the difference of interregional influence paths,it is found that the influence degree and significance of shadow banks on NPL ratio,house price and stock price are lower in the eastern region comparing to the central and western regions.The low significance of the eastern region may be due to the complexity of the financial activities.And the impact of shadow bank on financial systemic risk is weaker compared with other shock factors.So the shadow banking scale in the eastern region has a weaker significant influence on financial systemic risk.The high correlation and significance between the size of the shadow bank and the NPL ratio,house price and stock market in the central region make the financial institutions have great impact on the financial systemic risk,which makes the shadow banking scale and financial systemic risk have significant U-type relationship.Although the shadow bank has a significant correlation with the NPL ratio,house price and stock price in the western region,the threshold effect of financial systemic risk is not significant because the development of financial system is imperfect.Finally,this paper puts forward some policy suggestions for the development of shadow bank and the stability of financial system in China.On the base of defining the definition of shadow bank in China,we should establish the micro-supervision system of each part of shadow bank,and strengthen the regulation of shadow bank from the angle of operation mechanism,risk accumulation and transmission mechanism.Establish a unified financial systematic risk measurement system with regional characteristics to strengthen the monitoring of financial systematic risks in regions.Guide the shadow banking development by controlling the shadow bank's capital which flowing into the asset market to guard against asset bubble risk.