The Operation Mechanism Of "Bank Core" Shadow Bank

In 2018 government work report,it recommended improving supervision of shadow banking,Internet finance,financial holding companies,and so on.With regard to shadow banking,China will continue to maintain a strict regulatory posture and manage the shadow banking to cooperate with the macro background of "decapacity","deleveraging"and "destocking" in the process of solving the problem of idle funds and unblocking financial channels to support the development of the real economy,in order to strictly prevent financial risks.Therefore,we should clarify the context of China's shadow banks at deeper depth,understand the operational mechanism of China's shadow banks,thus can we guide the shadow bank to help boosting economy.In this paper,FAVAR model is established to investigate the operational mechanism of "bank core" shadow bank.The advantage of FAVAR model is that it can make full use of a large amount of data by finding the non-observable factors,which will be extracted from many observable factors.And these factors are those capture the common driving force of the observable factors.Given the shortage of the data and the background of the rapid growth of shadow banking as a result of the credit crunch in late 2009,this study is set to observing the period of 2010-2017.After combing information from all papers and from the processes of shadow bank development in China from 2010 to 2018,this paper finds that the primary change of shadow banking in China is from channel business to interbank business.A large number of scholars are quite agree with that the majority of shadow banking capital is flowing into the housing market and local financing platform.Also considering that the shadow banking wears the characteristics of "bank core" and"sami-credit".On those basis,the "bank core" shadow bank is extracted from the business inside the commercial bank,funds,securities,insurance and trusts.Furthermore,the model covers the real estate market,real economic activities,credit scale and monetary policy.Through the analysis of the empirical results,this paper draws the following conclusions:1.Under the background of "fund idling",the expansion of shadow bank will hinder the development of real economy to some extent.However,the development of shadow banking,as a process of financial deepening,will also help enterprises prosper.2.Monetary policy affects shadow banks,and shadow banks interfere with the effectiveness of monetary policy.3.In China,shadow bank and the real estate market is very close and synchronized.4.Shadow banks have a negative and slow impact on the size of credit.5.Trust lending are the main form of banking cooperation in the shadow banking system.