Analysis Of The Influence Of Shadow Banks On The Formulation And Implementation Of Monetary Policy In China

As the financial crisis, the rapid growth of shadow banking and its impact hasaroused widespread concern. The shadow banking system refers to free in thesupervision, playing with comparable functions of the commercial banks. Itsdevelopment process is the game between financial institutions and the governmentachievements. In our country, the shadow banks also exist, but due to financial marketenvironment and complex financial support are still in the primary stage. It is thesupplement of the commercial banks and the system is simple. The shadow banking inChina constitutes by the bank financial products, trust loans, securities companies andfund management business and large financial intermediaries. The shadow banking inChina solves the financing difficulties of enterprises; produce an effect on theoptimization of economic arrangement. At the same time, because of the shadow banksfree from outside supervision, the part of financial tools and products weaken the role ofbank credit in the monetary policy conductive process in a certain extent.Founded on the above background, this paper will analyze the impact of the shadowbanking on China’s monetary policy. On the basis of the related theory, this paper willanalysis the current development, causes, category of the shadow banking in China andthe influence on China’s economy. On the examination of the pressure of shadowbanking to the monetary policy, it will analyze the influence of the shadow banking onmonetary policy tools and transmission mechanism. Because the monetary policy systemof China is constantly modifying, the appearance of the shadow banking disturbed themonetary policy modification, obstruct the efficiency of monetary policy. By reason thatthe shadow banking is outside of the credit scale control, the financial innovations raise ahuge number of funds, gravely affecting the achievement of the aim of the monetarypolicy in China. It specially decreases the testability and controllability of theintermediate target of monetary policy and the relevance to the ultimate goal. Affectionof traditional quantitative monetary policy instruments will be weakened. Direct orindirect monetary policy tool of monetary policy, like the statutory deposit reserve rate,open market operations can’t control the effective market liquidity. Meanwhile, theshadow banking holds back the transmission mechanism of the monetary policy, raising the difficulty of monetary policy control. China should modify monetary policy system.The article has five parts, as follows:The Article First Part is an introduction. Describe the prehistory, significance,literature review, research technique and innovation, so as to lay the framework for thewhole research.The second part is the relevant basis for shadow banking and monetary policy.Firstly, study the definition and character of the shadow banks, and the differencebetween with commercial Banks. Then present the theory of monetary policy, to lay thefoundation of the report about the influence of shadow Bank to China’s monetary policy.The third part is to explore the impact of the shadow banking on the construct ofmonetary policy in china. First, analyze the sort of shadow banks, causes. Then analysisthe affect shadow banks on the establishment of the monetary policy. Shadow banksmake specifying the monetary policy more difficult.The fourth part is to explore the impact of the shadow banking on the process ofmonetary policy. First dissect the influence of the shadow banking on the monetarypolicy tools, the intermediate target, and the monetary policy transmission mechanism.Secondly analyze the impact of the shadow banking on the execution of monetary policy.The first aspect is the examination of the influence of shadow banks on the ultimate goalof monetary policy. The second aspect is to explore the influence of shadow bankingspread to the direction of monetary policy. The third aspect is to evaluate the asymmetryimpact of the shadow banking on the monetary policy.The fifth part is the suggestions to eliminate the shadow banking adverse influenceon monetary policy. This chapter gives to the relevant suggestions from different angles.