A Study On The Effect Of Shadow Banks Development On The Effectiveness Of China's Monetary Policy

Looking at today's global financial system,the shadow banks through the subprime mortgage crisis,show the impact on the entire financial system unprecedented power,and quickly attract the world academic and regulatory attention and discussion.Unlike the shadow banks of Western developed countries,China's shadow banks have a very close relationship with the conventional banking system,especially with small and medium-sized banks.Shadow banks have made contributions to improving the efficiency of resource allocation,speeding up capital flow and promoting the prosperity of financial markets.With its growing scale,shadow banks have had some influence on the effectiveness of China's monetary policy.This paper will further study the influence of the development of shadow bank on the effectiveness of monetary policy in China from both theoretical and empirical perspectives.This paper first summarizes the domestic and foreign scholars on the connotation and constitution of the shadow banks and the mechanism of monetary policy and other issues of the literature review,laying a solid foundation for the next in-depth study;and then from the theoretical level study monetary policy effectiveness of the mechanism affected by shadow banks.This paper discusses the process that the expansion of the shadow banks affect the effectiveness of monetary policy carrying out from the monetary policy tool,monetary policy transmission mechanism,the monetary policy control target and the lag effect of the monetary policy.Using the BVAR model to measure the effect of the monetary policy affected by the shadow bank,the empirical results show that the development of the shadow banks to a certain extent weaken the implementation of monetary policy in China,on the basis of the relevant policy recommendations.Through the empirical analysis,it is concluded that the shadow banks have a great effect on pulling the domestic economy in the short term,but this effect is not sustainable.In the long run,it may hinder the healthy and orderly development of the social economy.The shadow banks have a crowding out effect on the traditional financing channels of bank loans,and then have a negative impact on the aggregate financing to the real economy led by bank loans.The response of China's price index to the rapid expansion of shadow banks has a certain lag,but after a period of time the liquidity to the market injected by the shadow banks begin to appear,not to be easily perceived by the regulators,will expand the money supply and then lead to raise the price level.This paper puts forward to improving the financial supervision system and accelerating the transformation of the monetary intermediary target.The financial institutions should establish the interest rate pricing to adapt to the marketization of interest rate and gradually improve the policy recommendations on the classification and risk regulation of the shadow banks.