Research On The Influence Led By Shadow Banking To The Financial Stability In China

In 2008, the international financial crisis triggered by the U.S. subprime mortgage crisis caused a serious impact on the global economic and financial system. In the discussion of the root cause, somebody thinks that the shadow banking system is one of the main culprit, and the lack of supervision by the Monetary authorities can be a amplifier. The world’s financial crisis has fully exposed the complexity and vulnerability of the shadow banking system. As a result, more and more scholars begin to study the shadow banking system to look for the origin of the shadow banking and the development of the scale of the shadow banking. At the same time, in order to prevent the systemic risk of the entire financial system caused by shadow banking crisis, all the countries have begun to strengthen the supervision of the shadow banking system. As the world economic development’s engine, it is necessary for China to maintain the economic growth with a certain speed. Therefore, it is imperative to measure the financial stability of our country and research the impact of the shadow banking system.In this paper, we analysis the composition and main form of the China’s shadow banking in an objective perspective with the quantitative and qualitative analysis. We summarized the characteristics, the existing problems and the possible impact to our country of the shadow banking. We have selected 16 indicators from macroeconomic environment, financial development and market environment to establish the financial stability index system of China according to the FSAP evaluation framework. On the basis of the measurement of China’s financial stability with the factor analysis, A VAR model to study the relationship between the shadow and financial stability is established. We select the growth rate of foreign currency loans, the growth rate of household deposits and the scale of Bank and Credit Cooperative to reflect the scale of China’s shadow banking, we make regression analysis from 2008 to 2014 with Stata software, we can measure the effect on financial stability index of the shadow banking through the impulse response analysis. Finally, we will put forward policy recommendations to make a healthy development for the shadow banking according to the above empirical analysis. On the one hand, we should establish a dynamic risk monitoring system and legal system of financial supervision to improve the transparency of information, on the other hand, we should perfect the financial innovations of the shadow banking system and foster a good economic environment to guide the shadow banking develop healthily.