Research On The Influence Of Shadow Banks On Money Supply In China

After the financial crisis broke out in the United States in 2008,shadow banking entered the research field of regulators and academics.In the past decade,shadow banking has flourished in China and has gradually become an important part of the financial market.Different from developed countries,Chinese-style shadow banking is mainly represented by the shadow business of commercial banks,which is the credit activities carried out by commercial banks using channel business and inter-bank business to avoid credit supervision and capital constraints.At present,the focus of academic research at home and abroad is mostly focused on three aspects:the definition of shadow banking,the risk effect and its influence on monetary policy.However,there is a lack of in-depth exploration of the impact mechanism of shadow banking on money supply.Therefore,based on a detailed description of the background,characteristics and operation mode of Chinese shadow banking,this paper innovatively adds shadow banks to the money multiplier model and analyzes its theoretical impact mechanism on China's money supply.According to the credit money creation theory,the basic money and the money multiplier jointly determine the money supply,while the basic money is controlled by the central bank,so the shadow bank's influence on the money supply is mainly realized through the money multiplier.Based on the mathematical derivation of the money multiplier model added to the shadow bank,it is found that the influence of the shadow bank on the money multiplier is uncertain.On the one hand,shadow banking will increase the scale of social credit and enhance the derivative ability of money due to its low deposit reserve and non-capital constraint,thus increasing the money multiplier.On the other hand,some products of shadow banking(such as wealth management deposits,trust products,money market funds,etc.)do not meet the liquidity requirements and are not included in the statistical scope of broad money supply(M2),therefore,the substitution effect of shadow banking products on bank deposits weakens the foundation of credit money creation,lowers the money multiplier,and exerts downward pressure on money supply.Based on the above theoretical analysis,this paper uses VAR model and rolling window regression method to conduct empirical tests to analyze the influence of shadow bank ratio(S),statutory deposit reserve ratio(R),excess reserve ratio(E),cash leakage ratio(A)and monetary policy cycle variable(Z)on monetary multiplier(K).The empirical results of VAR model show that:from a long-term perspective,the expansion of shadow banks has a significant negative impact on the money multiplier;Rolling window regression analysis shows that in recent years,with the improvement of the liquidity of shadow banking products and the broadening of the statistical scope of broad money supply,the negative impact of shadow banking on China's money multiplier has gradually weakened.To sum up,the rapid development of Chinese shadow banking has made the money multiplier more complicated and the supervision of money supply more difficult.