Research On The Impact Of Shadow Banking On The Financial Stability

In recent years,the rapid development of China's regional economy and the rising on the degree of marketization,the traditional physical bank has been unable to meet people's growing financing needs.The shadow banking which as an important part of China's financial system is experiencing the expansion of development.On the one hand,China's shadow banking,as a complement to the traditional banking system,has promoted financial innovation and financial market reform.It played a crucial role in promoting the market-oriented interest rate.On the other hand,due to the limited supervision of shadow banks in China,there are different levels of black-box operation,the risk of regulatory arbitrage arises,disrupting the financial market order and reducing the stability of the financial market.Therefore,it is necessary to further explore the shadow banks on the basis of predecessors' research.Sinc the study of the relationship between shadow banks and financial stability is mainly conducted in the whole country,the scale of China's shadow banking Stability,the impact of less specific thinning to calculate the size of the shadow banks in various regions.This paper is based on this,respectively,the size of the shadow of the Middle East and West Bank and regional financial stability index,respectively,from the Middle East to analyze the impact of shadow banking and financial stability.First,the article analyzes the definition,characteristics of the shadow bank and describes the characteristics of the financial stability in theory.And discusses the influence mechanism of the shadow bank to the financial stability from the positive and the negative side.Secondly,this paper studies the status quot of shadow banks and financial stability and selects the measurement methods.Then,this paper measures China's shadow banking scale from the borrower's point of view from 2000 to 2015.To construct a regional financial stability index covering macroeconomics,banking,securities and insurance,to assess the level of financial stability in China.Thirdly,we establish a vector auto-regressive model of the financial stability index and the logarithm of shadow bank size.In order to analyze the impact of Shadow Banking onFinancial Stability in the eastern region,the central region,and the western region.We also carry out the unit root test,the co-integration test,Grange causality test,variance decomposition,etc.,.The empirical results show that China's shadow banking does affect the stability of the financial market,and this influence can not be immediately reflected in the financial market at present.It has certain hidden and time lag.As time goes on,the shadow banking of the Eastern Region,the Central Region,and the Western Region contribute more and more to the instability of the financial market,To the tenth period,the highest contribution to the central region,32.63%,followed by the eastern region and western region,respectively as 25.65%,23.04%.This result also confirms the negative effect of shadow banks on the financial market with a certain time lag effect.Finally,based on the empirical results,this paper puts forward some policy recommendations on the supervision of the shadow banks and the improvement of the financial stability system.