An Analysis Of The Impact Of Shadow Banks On Regional Financial Stability

After the financial crisis in 2008,shadow banking attracted extensive attention at home and abroad.In the meantime,China's shadow banking has begun to take shape.And it has been coming into a period of high-speed development since 2010.Although shadow banking has improved the efficiency of resource allocation in China's financial markets to some extent,its characteristics of non-transparent information,weak supervision,and high market sensitivity make it easy to trigger systemic risks in the financial market.Especially in the past five years,the financial instability in various regions has gradually become prominent,and incidents represented by “the Wenzhou lending crisis” have occurred from time to time.This paper focuses on analyzing the impact of shadow banking on financial stability from both the national and regional perspectives.First,redefining the connotation and composition of shadow banking,and classifying shadow banking in China into three kinds: banking shadow banking services,shadow banking services of non-banking financial institutions,and other shadow banking services.Besides,estimating the scale and composition of shadow banking across the country,Shaanxi,and Zhejiang.The calculated results show that as of the end of 2016,the scale of China's shadow banking reached 89.16 trillion RMB,and the shadow banking scale in Shaanxi and Zhejiang were 1.89 trillion RMB and 5.56 trillion RMB,respectively.Afterwards,this paper theoretically studies the effect of shadow banking on financial stability from the three perspectives of economic development,financial stability and regulatory effectiveness.At the same time,this paper establishes an evaluation system of financial stability and scores indicators of financial stability across the nation,Shaanxi,and Zhejiang.Since theoretical analysis of shadow banking indicates both positive and negative effects on financial stability,this paper establishes a nonlinear regression model for empirical research and concludes that shadow banking and financial stability have more obvious threshold effects.The effect in the regional category has obvious differences according to the economic and financial development in the region.The threshold value in Zhejiang is obviously higher than that in Shaanxi.As of the end of 2016,the relative scale of shadow banking across the nation,Shaanxi,and Zhejiang has exceeded the threshold,and the negative effects of shadow banking will be further highlighted,which need more attention.Finally,according to the research results,this paper puts forward some countermeasures and suggestions for the development and supervision of shadow banking.