Research On The Risks And Supervision Of China’s Shadow Banking System

2015 is the year of ending the "Twelfth Five-Year Plan" and beginning of the "Thirteen Five-Year Plan", as while as the year that China deepen the reform in an all-round way, and it is also the year of a new milestone in the reform of China’s financial markets and financial innovation. It means that the market-based interest rate of China has made a major step forward. Under our prudent monetary policy and other macro backdrop, with the continuous development of market demand and financial innovation, the size of the shadow banking develops rapidly, while the risk of continuous exposures. Different from abroad, China’s shadow banking system started late, since the opening of financial products, it has began to develop. Especially in recent years, with the financial innovation products and Internet finance services emerging, the economic status of the shadow banking system is continuing to rise, and the risk of the shadow banking system and the macroeconomic contribution is gradually increasing. In addition, a series of financial cases occurred recently sounded the alarm for the financial markets. The expanding credit makes a lot of "sunshine" funds hidden in the shadow banking system, which poses a greater threat and challenge. It disrupts the financial order, weakens the macro-control policy the central bank, and especially affects the healthy development of China’s financial system. Although China’s regulation of the shadow banks which cooperate with banks and non-financial institutions which have similar function of banks is relatively stringent, but for non-financial institutions which have financing function and the whole shadow banking system, it is still a lack of effective risk warning mechanism and regulatory measures. Therefore, this paper is trying to accurate insight of the shadow banking system, comprehensively study its risks and trends, and establish an effective risk warning mechanism in order to provide policy recommendations to the regulatory authorities. In particular, it has an important significance for maintaining the stability of China’s financial system.First of all, this paper introduces the background and significance of the research, as while as the literature review and research design of shadow banking; Next, it describes the relevant theory and the definition of the shadow banking system in this article; Then, it discusses the development status of shadow banking system, including classification, characteristics and operation mechanism; The next two part, it demonstrates the construction of a concrete analysis of risk and risk monitoring indicators of the shadow banking system; Finally, it gives the policy recommendations by setting up regulatory risk indicators of the shadow banking system for regulatory authorities.In this paper, research methods of qualitative analysis and quantitative analysis are both used, mainly qualitative research methods. By discussing the definition and status quo of the shadow banking system, this paper analysis of the risk of the shadow banking system, as while as its vulnerability, its financial supervision and other related basic theory to get the general idea. Using quantitative analysis, statistical data, statistics and graphs we will confirm research viewpoints. In addition, learning to use and comprehensive multi-factor theory of Chinese shadow banks to make more accurate definition. This paper summarizes and analyzes the shadow banking system, while combines with China’s reality. The innovation of the paper is to collect data from the related parties, by classifying the risk of the shadow banking system to analyze the shadow banking risk indicators of trend, we will achieve an objective of understanding the risk of shadow banking system accurately. On the basis of the above, it puts forward policy suggestions for improving the supervision.