The Influence Of Shadow Banking's Liquidity Creation Function On The Stability Of Financial System

In recent years,with the expansion of the shadow banking,it has gradually occupied an important position in the financial market.The influence of the development of shadow banking on the stability of the financial system has also attracted the attention of scholars.As the main function of shadow banking,the influence of liquidity creation of shadow banking on the stability of financial system is a problem that is worthy for us to study.This paper selects the perspective of the liquidity creation function of shadow banking,and makes a literal review of domestic and foreign scholars' researches on the liquidity creation of shadow banking.This research analyses the influence effect and mechanism of the shadow banking's liquidity creation function on the stability of the financial system from the theoretical and empirical aspects,and finally puts forward relevant policy recommendations.Firstly,the paper expounds the research background and the implication of research,and sorts out the relevant researches of domestic and foreign scholars on the implication of shadow banking,the function of shadow banking's liquidity creation and its influence on the stability of financial system,and then establishes the research framework of this paper.Secondly,the paper constructs a financial stability index system and measures the financial stability index,which is used to analyze the effect of the shadow banking's liquidity creation function on the stability of the financial system..Through empirical analysis,the result shows that the increase in the speed of bank liquidity creation will cause the stability of the financial system to decline.Thirdly,the paper selects the two aspects of commercial bank liquidity and financial asset price,and uses VECM and TVP-VAR model to analyze the impact mechanism of shadow banking's liquidity creation on financial system stability.The liquidity of commercial banks shows that: When the macro economy is stable,the shadow banking's liquidity creation has a buffering and expanding effect on the liquidity of commercial banks.When the macroeconomic is in recession,the shadow banking's liquidity creation has a contraction effect on the liquidity of commercial banks.As the most important part of China's financial system,the influence on the liquidity of commercial banks will affect the stability of the financial system.In addition,the financial asset price fluctuation shows that: because of the high cost of financing,shadow banking funds will flow to higher risk real estate market or stock market,resulting in rapid rise in house prices and stock prices,leading to the appreciation of the RMB.It will affect China's capital market,real estate market and the foreign exchange market,These three markets play an important role in the financial system,the influence on the stability of these three markets will affect the stability of the financial system.Finally,according to the research conclusions,this paper puts forward the reference policy suggestions.It should focus on the liquidity creation process of the shadow banking business,guide the rational flow of shadow banking funds,improve the transparency of the shadow banking system,and thus reduce the risk of high leverage and maturity mismatch.It should also establish firewalls between shadow banking and various financial institutions to prevent cross-risk,and at the same time accelerate the construction of a shadow banking scale statistical system.