A Study On The Impact Of Chinese Shadow Banking On Bank Risk Assurance

After the international financial crisis in 2008,China's shadow banking entered a stage of rapid development.Shadow banking is regarded as a credit intermediary outside the traditional banking system,which relies on the innovation of financial products in the financial market to realize the transformation of credit functions.Shadow banking activities have significantly expanded Banks' balance sheets and extended the credit chain among financial institutions through inter-bank business and wealth management business.As financial institutions continue to increase leverage and the transaction structure of various products of shadow banking becomes more and more complex,shadow banking activities will inevitably affect the level of risk taking of Banks.Based on the non-equilibrium panel data of 122 Chinese Banks from 2007 to 2018,this paper makes an in-depth study on the impact of shadow banking on bank risk taking.The results show that shadow banking has an asymmetric effect on bank risk taking.Shadow banking activities measured from capital sources can significantly reduce Banks' risk-taking level,while shadow banking activities measured from capital sources can significantly improve Banks' risk-taking level.This conclusion is a new empirical finding which is different from the existing literature.This paper further divides the sample into two sub-samples of listed bank and unlisted bank for robustness test.For the listed Banks,the relationship between shadow banking and bank risk taking is consistent with the empirical results of the whole sample.For the unlisted Banks,there is no significant relationship between the shadow banking of the caliber measure of capital source and the bank's risk taking,but the estimated coefficient remains positive.The shadow banking of the caliber measure of capital will improve the bank's risk-taking level,which is consistent with the empirical results of the whole sample.This paper further divides the bank's risk taking into two parts: portfolio risk and leverage risk.The results show that the shadow banking activity of capital source caliber is to reduce the bank's risk bearing level by reducing the bank's portfolio risk and leverage risk,and the shadow banking activity of capital using caliber measure is to improve the bank's risk bearing level by increasing the bank's portfolio risk and leverage risk.This mechanism has also been verified in the empirical investigation of two subsamples of listed Banks and unlisted Banks,and the results of the two subsamples are consistent with the whole sample.