A Comparative Study Of The Impact Of Shadow Banking Between China And The United States On The Real Economy

Shadow banking refers to the unregulated financial intermediary activities,similar to bank traditional businesses conducting credit and liquidity transformation under Basel framework.Both the shadow banking systems of China and the U.S.resulted from liberalization of interest rates and financial innovations,but fundamental distinctions did exist between them.The shadow banking system of China have the commercial banks at its core,whose major pattern is to have the money from commercial banks invested into real economy businesses through multi layers and financial channels of different forms.The shadow banking system in the U.S.is more complicated,among which ABS plays an important role in affecting the real economy and the traditional private placement businesses are quite similar to the‘non-standard credit right' pattern in China.The shadow banking systems have visible influences over real economy operations in both China and the U.S.From a micro perspective,major over-capacity industries,private businesses and small-scale businesses have been relying on the shadow banking financing,ABS businesses shrunk after the 2008 crisis and businesses of middle scale in the U.S.also view the traditional private placement as one concrete financing option.From a macro perspective,the shadow banking system enlarges the monetary multiplier,expanding the total credit amount,but since its being unregulated,more systematic risks have got accumulated into the system.Given the experience from the U.S.and other developed countries,the shadow banking system in China could serve its proper role in the process of easing financial repression and cultivating new economic drivers in the coming years.