Abstract
In recent years, China’s shadow banking has developed in full swing, showing a trend of expanding scale. The vigorous development of shadow banking reflects the transformation of China’s financial industry from a single traditional bank to a new financial industry that provides customers with comprehensive financial services such as financing, financial management, risk management, payment and settlement. In this transformation, the systematic risk of shadow banking does not lie in the shadow banking system itself, nor is it the inherent defect of shadow banking. The root of the risk lies in the regulatory loopholes of the existing banking regulatory system. Therefore, from the perspective of local supervision under the decentralization of central government, this paper relies on the specific shadow banking business of bank-trust cooperation, adheres to macro-prudential supervision to prevent systemic risks, improves the information statistics and information sharing mechanism, supervision and management coordination mechanism of shadow banking, and establishes a risk rating mechanism for shadow banking to improve the transparency of shadow banking operation. The construction of shadow banking supporting mechanism under the decentralization of central government shall be improved, and the local financial supervision system of shadow banking shall be established and improved in line with China’s reality to balance “financial innovation” and “effective supervision” and to achieve the unity of safety, efficiency and fairness.
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Notes
See Dongyan Chen, Shadow Banking [1, p. 1].
The founder of moody’s company is John moody, who initiated the credit rating of railway bonds in 1909. In 1913, Moody’s began to give credit ratings to public utilities and industrial bonds. Moody’s has 800 analysts and more than 1,700 assistant analysts around the world. It has institutions in 17 countries and stocks are New York Stock Exchange (NYSE)Listed transaction (code MCO).
According to moody’s calculation, generalized shadow banking includes entrusted loans, trust loans, undiscounted bank acceptance bills, wealth management products, docking assets, off-balance sheet of banks, loans from securities companies and funds, financial companies, private loans and others (financial leasing, micro loans, pawnshop loans, P2P network loans, asset-backed securities and consumer finance companies).
On April 8, 2018, the China Banking Regulatory Commission and the China Insurance Regulatory Commission merged to form the China Banking and Insurance Regulatory Commission.
The predecessor of the working paper of China banking regulatory commission is the working paper of China banking regulatory commission, which was founded in 2011, and can be consulted from internal and external websites.
See Wu [2].
See [3].
See Guo [4].
Refer [3].
See the Notice on Regulating Banking-trust Financial Cooperation Business issued by China Banking Regulatory Commission in 2010, Banking-trust financial cooperation business as mentioned in this Notice refers to the behavior that commercial banks entrust customers’ financial management funds to trust companies, and the trust companies act as trustees and manage, use and dispose of them according to the agreement in the trust documents.
See Kuizhong Li, An Overview of the Basic Theory of Bank-trust Cooperation, Shang, No.10, 2016.
Refer to the reporter’s question answered by the relevant responsible person of CBRC on the issuance of the Interim Measures for the Administration of Personal Financial Services of Commercial Banks and the Guidelines for Risk Management of Personal Financial Services of Commercial Banks (September 29, 2005).
See Yan [5].
See Wang et al. [6].
See Qiu and Yi [7].
See Shen [8, p. 439].
See Shen [8, p. 438].
See Li [9].
See Zhixian Shen, editor-in-chief [8 , p. 455].
See Sun [10].
See Li [11].
See Zhu [12].
See Articles 28, 29 and 30 of the Interim Measures for the Administration of Personal Financial Services of Commercial Banks in 2005; the fourth point of the Notice on Further Regulating Personal Finance Business of Commercial Banks in 2008.
See Li [13].
See Pozsar et al. [14, p. 4.]
FSB: Formerly known as the Financial Stability Forum (FSF), a loose cooperative organization established by seven developed countries (commonly known as G7) in April 1999 to promote the stability of the global financial system. Its members include Argentina, G7, the European Central Bank and IMF and other international institutions. The G20 summit held in London on April 2, 2009 decided to expand the FSF membership to all G20 member countries including China and renamed it the Financial Stability Board, or FSB. The main responsibilities of FSB are to pay attention to financial market risks, strengthen cooperation and information sharing among regulatory agencies of member countries, and promote global financial stability. Its membership extends to the central banks, finance ministries and regulatory agencies of all G20 member countries including China, as well as major international financial institutions and professional committees.
See [15].
Refer [16].
See Jing [17, p. 137].
See Chen [1, p. 139].
Institutional supervision refers to the establishment of supervision institutions according to the types of financial institutions, different financial institutions are supervised by different supervision institutions, and the supervision subjects of a certain type of financial institutions have no right to interfere with the business acquisition of other types of financial institutions.
Functional supervision refers to the division of supervision and supervision according to the nature of the business, such as banking, securities and insurance, and the regulators supervise the business regardless of the nature of the institutions engaged in these business operations.
The separate supervision system is a system of supervision according to the division of different institutions and their business scope in the financial industry. The separate supervision system in various countries is usually supervised by multiple financial supervision institutions, and the general banking industry is supervised by the central bank. The securities industry is supervised by the Securities Regulatory Commission. The insurance industry is supervised by the Insurance Regulatory Commission, and each supervisory institution is responsible for the division of labor and coordination, which together constitute a national financial supervision organization system.
Mixed financial supervision refers to the comprehensive supervision of all financial businesses of all financial institutions by one supervision institution.
See Zhang [18].
See Guo and Xia [19] .
Refer [20].
Refer to Huang [21].
See Huang [22].
See Li and Wu [23].
See Pan, [17, p. 58].
See Shi [24] .
See Ding [25].
The research on the economic phenomenon of “information asymmetry” can be traced back to the research on “lemon market” in Akerlof at the earliest, which usually means that both parties have different levels of information that have an impact on the transaction, which can lead to moral hazard or adverse selection, and lead to the failure of financial markets.
See Liu [26].
See Chen and Yuan [27].
See Zhiwei Liu [28].
See Qu [29] .
See Guo and Xia [19].
According to the report of the financial stability board (FSB), since the credit intermediary chain of the shadow banking system can be cut into multiple links and have different forms under different regulatory frameworks, we should pay attention to its financial essence rather than the legal form of the institution when identifying shadow banking.
See Lin and Li [30].
See Yu [31].
See Shen [32].
See Yuan [33].
See Chen [34].
See Duan [35].
See Zhang and Chen [36].
See Chen [37].
See Wang [38] .
Refer [39].
See Xu [40].
See Chen [41].
See Yao [42].
See Li [43].
See Wang [38] .
See Zhang [44].
See Wu [45].
See Zhang [46].
See Huang [47].
See Qingmin Yan and Jianhua Li, Research on China’s Shadow Banking Supervision, Renmin University of China Press, 2014, p. 308.
See Huang [47].
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Shanghai Planning Office of Philosophy and Social Science (CN) (Grant No. 2019BFX007).
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Zhang, J., Xu, L. Local supervision of Chinese shadow banking. J Bank Regul 24, 337–356 (2023). https://doi.org/10.1057/s41261-022-00200-9
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DOI: https://doi.org/10.1057/s41261-022-00200-9