Research On The Risk Conduction From The Shadow Banking To The Local Government Debt In China

Since the US subprime mortgage crisis happened in 2008,scholars focused on shadow banking,considered that because the lax regulation of the financial services innovation,resulting in the accumulation and outbreaks of risk.The crisis spread to a wide range in the word,so the global economy into recession,China has actively carried out economic stimulus plan to deal with the impact of the crisis.At that time the central government introduced a 4 trillion rapid central investment policy,the central government invested about 30%,the rest of the funds provided by local government.This is one of the reasons that our local government debt gro'wing rapidly.In China,the risk of shadow banking and the rapid increase in the size of local government debt,that almost simultaneously came into the public view.Compared with the developed countries,China's financial markets are not perfect,and has its own characteristics.In terms of the regulatory regime,because of the strict regulation for traditional financial services,shadow banking innovated business to avoid regulation,and to meet the needs of that the market demanding for diversification of capital;The city bond that issued by local government financing platform company is also to avoid regulation.Under the strict control of bank loans to local financing platform company,local governments with shadow banking established the capital supplying and demanding relations,in order to meet the needs of the construction of investment,so the risk conduction with it.Once shadow banking risks expose,there is a impact on local government debt risk.The main content is divided into five parts.The first part,Introduction,which introduces the background of the selected topic and the significance,literature review,research methods and innovations.Second,describe the basic situation of the shadow banking and local government debt,and sum up their risk characteristics.The third part,based on the risk characteristics,elaborates the reasons of the local government debt risk may be affected by shadow banking.Then according to the type of business of shadow banking,analysis the source,transmission carrier conduction and conduction path of the shadow banking risk to local government debt risk.The fourth part,using GARCH-CoVaR model to quantitatively analyze the effect of risk spillover,the results show that shadow banking risk has positive spillover effect on the risk of local government.The fifth part,puts forward the corresponding policy recommendations from three aspects:First,strengthen risk supervision of the front of the chain,as shadow banking regulatory.Second,strengthen risk supervision of convergence chain,as cross business risk supervision.Third,Strengthen risk supervision of the end of the chain,as local government debt risk supervision.