Research On The Impact Of Shadow Banking Of Non-financial Enterprises On China’s Financial Stability

With the deepening of China’s economic financialization,non-financial enterprises are more and more involved in the financial field and gradually become a new participant in China’s shadow banking business.The shadow banking behavior of non-financial enterprises is easy to gather financial risks,which puts great pressure on China’s financial system.On the one hand,enterprises aim at capital accumulation,which will lead to overcapacity and hollowing out of industry in China’s economy;On the other hand,the correlation between financial institutions will increase.In case of default,it will trigger a chain reaction and directly impact the stability of China’s financial system.However,the shadow banking behavior of enterprises also has its rationality.To a certain extent,it can expand the financing channels of enterprises in a financing disadvantage,alleviate the distortion of resource allocation,reduce financial market friction and improve productivity.Therefore,it is of great significance to explore the influence and existence of shadow banking of non-financial enterprises on my country’s financial stability.This thesis discusses the impact of shadow banking business of non-financial enterprises on China’s financial stability from both theoretical and empirical perspectives.Theoretically,this thesis believes that the shadow banking business of non-financial enterprises affects financial stability in three ways.First,the shadow banking business of non-financial enterprises has pushed up the price of real estate and impacted China’s financial stability;Second,the shadow banking activities of non-financial enterprises lead to the change of leverage ratio of enterprises,which increases the business risk of enterprises and have indirect effects on financial stability;Third,real enterprises transfer risks to the financial system,and shadow banking risks of non-financial enterprises will spread to commercial banks and then affect the stability of the financial system,resulting in cross-spreading of risks.In the measurement of financial stability,this thesis selects the regional financial stability index system composed of three primary indicators and 17 secondary indicators of macroeconomic environment,financial market and local finance,and constructs and measures the financial stability index(FSI)of provinces and cities according to this index system.At the empirical level,this thesis focuses on the annual data from 2007 to 2019 of non-financial companies listed on A-shares in Shanghai and Shenzhen to calculate the scale of shadow banking,uses the entropy method to synthesize the financial stability index to measure the financial stability of 31 provincial administrative regions in Chinese mainland,establishes a pvar model to study the impact of shadow banking business of non-financial enterprises on China’s financial stability,and finally draws four conclusions.First,the shadow banking of non-financial enterprises has a significant negative impact on China’s financial stability,and this impact is lagging and persistent;Second,the shadow banking behavior of non-financial enterprises will significantly increase the price of real estate,exacerbate the real estate bubble and affect China’s financial stability.Third,when enterprises carry out shadow banking business appropriately,it can help to reduce the leverage ratio of enterprises.However,with the allocation of financial assets exceeding a certain limit and the increase of enterprise speculation psychology,it will lead to the increase of enterprise leverage ratio;Fourth,in the short term,the non-performing loan ratio of commercial banks will increase due to the expansion of shadow banking scale of non-financial enterprises.However,in the long term,the development of shadow banking can provide credit support to small and medium-sized economic entities and make up for the financing gap of enterprises.Therefore,it can promote employment and economic growth,and is also conducive to the stability and coordinated development of the banking system.Based on the conclusions of empirical analysis,this paper believes that the shadow banking of non-financial enterprises will put pressure on China’s financial stability,but it also has its necessity.Therefore,supervision is the key.For the government,it is necessary to regulate the shadow banking business of non-financial enterprises,and let finance return to the origin of serving the real economy.Only by letting finance "transfuse blood" for the real economy can we promote high-quality economic development and achieve long-term stability in my country’s financial system.Combined with the above understanding,this paper puts forward five suggestions.First,improve the scale measurement system of enterprises participating in shadow banking business;Second,strengthen the supervision of enterprises’ shadow banking behavior and strengthen the information disclosure mechanism;Third,accelerate the market-oriented reform of financial institutions;Fourth,improve the real investment environment and improve the quality of investment;Fifth,clarify the inevitability of the existence and development of shadow banking in China’s non-financial enterprises,and avoid the "one size fits all" clean-up and rectification.