TITLE:
Shadow Banking, Monetary Policy, and Confidence Effects in China: Empirical Research Using a Structural Vector Autoregressive Model
AUTHORS:
He Cong
KEYWORDS:
Shadow Banking, Monetary Policy, Confidence Effect, Structural Vector Autoregressive Model
JOURNAL NAME:
Modern Economy,
Vol.10 No.1,
January
10,
2019
ABSTRACT: By using monthly data regarding the scale of shadow
banking, interest rates, loan balances, and the market confidence index in China from 2013 to 2017,
this study constructed a structural vector autoregressive model to investigate
the impacts of monetary policies and confidence in the economy with a special
parallel financial intermediary. The regression results indicated that the tightening of monetary policy
had compressive effects on commercial banks and shadow banking in China;
however, the characteristics of Chinese shadow banking increased overall economic volatility,
making the financial system more vulnerable. In addition, this study determined that the
influence of confidence in the market in China, as demonstrated through
responses of monetary policy authorities, had a considerable effect on shadow
banking. We further determined the channel through which confidence affected
the credit scale.