Economic Policy Uncertainty,Shadow Banking And Risk Taking Of Commercial Banks

Since the outbreak of the 2008 world financial crisis,China has had to adjust its economic policies at any time due to increasing internal and external disturbance factors.Both the "four trillion yuan plan" to deal with the crisis and the "mini-stimulus" under the new normal have effectively maintained the stable operation of the economy,but they have also caused the uncertainty of economic policies to become increasingly prominent.As the core of the financial system,can commercial banks "guard against systemic financial risks" ? Strict regulatory rules have spawned numerous innovative financial products,and shadow banking has developed rapidly based on commercial banks.Will it have a negative impact on commercial banks’ risk taking?In order to answer the above questions,this paper firstly uses the theoretical research method to collect and sort out relevant literature to provide theoretical support.Then,the empirical research method is used to conduct in-depth analysis with the data of 106 commercial banks from 2008 to 2019 as samples.The following conclusions are drawn: First,the increase of economic policy uncertainty will cause the expansion of shadow banking;Second,there is a negative correlation between shadow banking and commercial bank risk-taking,but it is not significant.Third,the rising uncertainty of economic policy will lead to the increase of risk taking by commercial banks,and shadow banking plays a masking effect,which is different from most existing conclusions.The innovation of this paper is as follows: first,it broadens the research perspective of the economic consequences of uncertain economic policies and the factors affecting the risk-taking of commercial banks;Second,shadow banking is brought into the framework.It is found that although shadow banking expands with the increase of economic policy uncertainty,it does not increase the risk taking of commercial banks as expected,but plays a role of mitigating(covering).Thirdly,the structural equation model,which is rare in the field of finance,is used as the robustness test of the improved BK method,which makes the analysis results of the mediation effect more convincing.The conclusion of this study has certain reference value for the government,banks and financial regulators.The government should try its best to maintain consistency,continuity,openness and transparency in its policies to enhance public credibility and effectively guide public expectations.In the face of uncertain economic policies,banks should improve the ability of policy interpretation,guard against excessive risk taking,and carry out shadow banking business reasonably.Regulators should further develop the financial market and establish a targeted shadow banking regulatory system to better serve the real economy.