A Study Of The Impact Of Macroprudential Policy On The Scale Of China's Shadow Banking Business

After the outbreak of the subprime mortgage crisis,on the one hand,the harmfulness of shadow banking risks has been fully exposed.On the other hand,the central banks of various economies have realized that microprudential policy aimed at maintaining the stability of individual financial institutions has limitations,and the concept of macroprudential policy came into being.Central banks in various economies frequently implement macroprudential policies to manage and prevent systemic financial risks.Many scholars have also begun to try to evaluate the effect and effectiveness of macroprudential policies through empirical research.However,regulatory border issues and financial regulatory arbitrage have an impact on macroprudential regulatory policies targeting specific industries,i.e.,the implementation of macroprudential policies may result in the transfer of financial activities and financial risks to the shadow banking system.In view of this,based on the regulatory boundary assumption and financial regulatory arbitrage theory,this paper elaborates the impact of macroprudential policies on the scale of shadow banking business.Referring to the macroprudential policy summarized by the International Monetary Fund and the Macro Prudential Assessment implemented by China in 2017,nine macroprudential policies are used to construct the macroprudential policy indicator of China,and conducts empirical research in conjunction with China's quarterly market data for 2002-2018.The results show that the macroprudential policy indicator are positively correlated with the scale of the shadow banking business,which means that the implementation of tightening macroprudential policy will lead to an increase in the scale of shadow banking business.The study also found that the benchmark lending rate and money supply have a negative impact on the scale of shadow banking,which means that the growth rate of social financing scale is larger than the size of shadow banking in the process of policy interest rate increase or money supply expansion.The results of this paper support the boundary hypothesis and the existence o f regulatory arbitrage in the implementation of macroprudential policy.When implementing macroprudential policies to prevent systemic financial risks,regulators must ensure that the regulated business will not be transferred to the shadow banking system without any awareness.Based on the above conclusions,this paper puts forward four suggestions on how to regulate and restrain the tra nsitional expansion of shadow banking business under the background of macro-prudential supervisio n policy: unified supervision,risk isolation,reducing leverage and information disclosure.