The Influence Of Commercial Banks' Engagement In Shadow Banking Business On Bank Lending Channel

In recent years,affected by the financial supervision,financial disinter-mediation,marketization of interest rate and other market factors,the competition of the traditional credit business of commercial banks is becoming more and more intense.It is difficult for commercial banks to solely rely on interest income to maintain the original profit level.In order to cope with the adverse changes in the operating environment,the commercial banks in China actively expand the shadow banking business to wide the channel of profit and increase the source of income.However,the rapid development of the shadow banking business bring the challenge to the effective implementation of monetary policy.This paper first combs the related literature at home and abroad and then introduces the concept of shadow banking.Combining with the actual situation in China,this paper expounds the motivation and theoretical explanation of commercial banks' engagement in shadow banking business and analyzes the present situation of commercial banks' engagement in shadow banking business.In the aspect of theoretical analysis,combining with the actual situation in China,this paper first depicts the credit creation mechanism of commercial banks' engagement in shadow banking business.Then,the paper systematically analyzes the influence of commercial banks' engagement in Shadow Banking Business on monetary policy from the aspects of monetary policy transmission mechanism,monetary policy tools and monetary policy intermediary goals.In terms of the empirical research,this paper uses the micro data of 20 commercial banks in China from 2011 to 2016 to build econometric models,exploring the influence of commercial banks' engagement in shadow banking business on bank lending channel.Considering of the analysis results of a variety of econometric models,this paper finds that there is a significant substitution effect between the shadow banking business and the traditional credit business under the impact of monetary policy and this effect is more prominent in non-state-owned banks.Besides,via bank lending channel,the influence of shadow banking business on monetary policy transmission is asymmetric.The shadow banking business is more effective in offsetting monetary policy when monetary policy is expansionary,but less effective when monetary policy is tight.The effectiveness of monetary policy transmission bank lending channel is weaken when considering the commercial banks' engagement in shadow banking business.