The Impact Research Of Shadow Banking System On The Effectiveness Of Monetary Policy And Financial Stability

With the emergence of innovative financial instruments, the shadow banking has become a high-frequency words in today’s economic development. As we all know, the shadow banks played a "vital" role in the 2008 financial crisis, and since then a huge shadow banking risks for national regulators to bring the attention. This paper analyzes the impact of shadow banking and financial stability on the effectiveness of monetary policy in these two aspects.Based on research results, this paper introduced the Chinese shadow banking system, the definition of effectiveness of monetary policy and financial stability of these three and calculation method, also discussed the existence of shadow banking in China and the potential rationality risk. Then focus on the theoretical level explores the shadow banking mainly through credit creation function have an impact on monetary policy objectives and transmission channels as well as the shadow banking system generated by the financial risks and gather financial systemic risk threatening financial stability. Finally, empirical analysis through the establishment of VAR model including the shadow banking system, the effectiveness of monetary policy and financial stability of these three variables. The results show that:the regulated interest rates and money supply M2 is the cause of the development of the shadow banking, shadow banking development is weakening financial stability reasons, financial stability would be the ultimate goal of monetary policy--CPI and GDP impact, while CPI and GDP will also have an impact on financial stability. The article concludes with the transition should consider monetary policy, strengthen financial supervision and monitoring of shadow banking policy recommendations.