Research On The Impact Of Chinese Shadow Banking On The Financial Stability

In recent years, with growth of financial market reform and social finance, shadow banking is undergoing fast development in China. Shadow banking funds in China at present is mainly concentrated on the areas of private enterprise, individual industrial and commercial households, farmers and real estate, but these major industries are facing a lot of problems: Private enterprise, individual industrial and commercial households and real estate have the problem of surplus production capacity and excessive stock, there exists highly risk in farmers' management of agricultural and livestock because of natural conditions. On current stage, China has to simultaneously deal with slowdown in economic growth, making difficult structural adjustments, and absorbing the effects of previous economic stimulus policies. The risks of shadow banking will be gradually exposed, become an important factor affecting the stability of our financial system. "Shortage of money" event in 2013, the trust cash crisis in 2014 and P2 P finance platforms run events in 2015 are typical shadow banking risk signal, which also sound the alarm to prevent and dissolve the shadow banking risks.Based on the analyses to the actuality of financial market in China, this paper takes shadow banking as the object of study, analyses its impacts on financial stability. Firstly, this paper analyzes the cause, process, operating model, characteristics and regulatory status of Chinese shadow banking development in detail; Then measures the scale of shadow banking from the perspective of borrow, build a comprehensive index of macroeconomic, commercial banks, financial markets and foreign trade to assess the level of financial stability from 1992-2014 in China; Thirdly theoretically expounds the mechanism of shadow banking on financial stability, the negative impact includes reducing the effect of monetary policy, resulting in credit risk, liquidity risk and contagion risk, the positive impact includes promoting the transition of commercial banks and enrich the financial market level;Fourthly, with unit root test, cointegration test and granger causality test of the data, empirically examines the relationship between Chinese shadow banking and the financial stability by establishing the corresponding model on the basis of the data simulation. The results show that there is an U-shaped curve relationship between shadow banking and financial stability: when the scale of shadow banking is below the threshold,it may improve the financial stability, while on the contrary,it will reduce the financial stability; Finally, some regulatory recommendations are proposed at the end of the paper.In order to prevent and resolve the shadow banking risks, make it play a better role in promoting China's economics and finance, according to the conclusions of the research, the paper puts forward some suggestions for Chinese shadow banking development and supervision, including establishing the regulation mode of “Central Bank + Prudential Supervision Bureau + Behavior Supervision Bureau”, actively promoting the reform of the financial market, establishing and improving the legal and regulatory system of shadow banking, and reinforcing the international cooperation in financial supervision.