Research On Risk Supervision Of Shadow Banking In China

Since the year 2008,when the global financial crisis broke out,serious disasters have been caused to the world economic development and financial stability.The crisis was closely related to activities of the shadow banking system.Since then,the research on risks and supervision of the shadow banking system has become an important research topic in financial field.Under this background,studying shadow banking risk supervision in China has important theoretical and practical significance.It helps to develop basic theory about the shadow banking,strengthen the financial supervision of the shadow banking system,maintain the stability and security of the financial system,prevent systemic financial risks,and ultimately promote the development of the real economy.The research idea and route of this paper are as follows:literature review->status analysis->theoretical analysis->empirical verification->comparative analysis->policy suggestions.This paper includes contents of:(1)firstly,analyzing the history and status of the shadow banking risk supervision in China based on the literature review;(2)secondly,theoretically analyzing the harmful consequences caused by both the systematic and unsystematic risks of the shadow banking system and the generation and transmission mechanism of the risk;(3)thirdly,establishing the Generalized Autoregressive Conditional Heteroskedasticity(GARCH)and Conditional Value at Risk(CoVaR)models to statistically analyze&measure the systematic risk spillover effects of various shadowing banking systems in China in order to grasp the overall distribution of the systematic risks in shadow banking systems in China;(4)then,designing the risk pre-warning index system and then building the risk pre-warning model,to provide early warning on risks in the shadow banking system in China by using the Back Propagation(BP)neural network model;(5)finally,based on the systematic risk spillover effect and results of the risk pre-warning comprehensive evaluation,providing related countermeasures and suggestions for how to correct and improve the framework of supervision of the shadow banking system in China,mainly from three aspects:macro prudential supervision,micro prudential supervision and legal supervision.Main conclusions of this paper are:(1)the systematic risk of the shadow banking system in China is currently controllable generally,however we still need to pay attention to the systematic risk spillover;the systematic risk spillover of various types of shadow banking organization differs from each other,and the top three types ranked by the risk spillover possibilities are trust companies,insurance companies and securities companies respectively;the risk spillover of the trust companies are worth high degree of vigilance and attention especially;(2)through establishment of the pre-warning index system and model for the risk of shadow banking system in China and risk pre-warning by the neural network model,the results indicate that the risk pre-warning model can better perform risk pre-warning for the shadow banking system in China and thus has a certain practical application value;(3)based on the systematic risk spillover effect measurements and risk pre-warning results,together with the business model of "operation and supervision by business",this paper provides a new functional supervision framework for the shadow banking system in China,that is,adding a"shadow banking business supervision and coordination committee" based on the supervision by "1 central bank and 3 commissions";this committee carries out penetrating financial supervision in accordance with the principle of functional and behavioral supervision.There are some innovations in this paper:(1)A relatively comprehensive "supply-demand-technology" logic analysis framework is established to explain the generation and development of the shadow banking system in China;this framework logically combines the three factors of supply,demand and technology of the shadow banking system,makes analysis through the media role of technology together with the evolution course of the shadow banking system and hence explains the origin of the shadow banking system in China more comprehensively and more completely.(2)A more complete risk pre-warning index system for the shadow banking system in China is established.This system incorporates all main departments,and adopts the BP neural network to establish the risk pre-warning model to provide risk pre-warning.According to the research reports,such pre-warning models can better perform pre-warning for the shadow banking system in China.(3)A new supervision framework of "1 central bank,3 commissions&1 committee"(the shadow banking supervision&coordination committee)is envisaged and proposed.The basic objectives of this committee are functional supervision and behavioral supervision.It is based on the original financial supervision model of "1 central bank and 3 commissions" and strengthens supervision and coordination of shadow banking services.By using this framework,we could prevent and resolve the systematic financial risks caused by risks of shadow banking,maintain and ensure the stability of financial systems and financial safety and promote the development of the entity economy.(4)An innovative idea is put forward to perform triple dynamic and balanced supervision for the shadow banking system.This idea emphasizes functional supervision and behavioral supervision as the basic target and finally realizes triple dynamic and balanced supervision inside the shadow banking system itself,between the shadow banking system and the standard financial system,and between the development of the shadow banking and financial safety and stability.