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Title: The Relation of The Shadow Banking System on The Financial System in China
Authors: Xiao, Zhenyu 
Issue Date: 2022
Source: Xiao, Z. (2022). The Relation of The Shadow Banking System on The Financial System in China [Unpublished bachelor's thesis]. Wenzhou-Kean University.
Abstract: This paper selects the size of shadow banking, GDP, money supply and leverage ratio as four variables to study how the development of shadow banking affects the development speed and stability of China's economic system. In terms of financial impact, this article discusses potential risks from the institutional and system levels. In China, shadow banking is closely related to traditional commercial banks, so the systemic risks brought by shadow banking can easily be transmitted to the commercial banking industry. In this article, by constructing VAR model and conducting empirical analysis, I found that there is a lagging effect between shadow banking and macroeconomic factors. According to the VECE model and impulse response diagram, when shadow banking grows, it will bring a variable fluctuation to macroeconomic factors in the short term, which will have a positive effect on the growth of CPI and a negative effect on the growth of GDP and M1. But in the long run, shadow banking will still promote economic development. Through the variance decomposition table, we find that the growth rates of GDP, CPI and M1 have different contribution rates to the growth of shadow banking. Among them, CPI has the lowest contribution rate and GDP has the highest contribution rate. According to the AR unit root test and Granger test, it proves that there is a stable relationship between shadow banking and macroeconomic factors, and rejects the null hypothesis that there is no relationship between the two. This research draws attention to the data disclosure and supervision of shadow banking. When economic conditions change, attention should be paid to whether there has been abnormal growth in shadow banking over the period, not just the current period.
Appears in Collections:Theses and Dissertations

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