Shadow banking refers to all kinds of financial intermediary business outside the conventional banking system. Because of being free from supervision, hidden risk and cross infection, it is considered to be one of the culprits of the financial crisis in 2008.
Strengthening the supervision of shadow banking has been widely recognized by the international community. Since 2011, the financial stability Council (FSB) has published the global shadow banking monitoring report every year, and China has also submitted relevant data.
However, the characteristics and forms of shadow banking in different countries are different. Influenced by the structure of financial system, the degree of financial deepening and the orientation of regulatory policies, Chinas shadow banking presents different characteristics from other economies.
According to the report, Chinas shadow banking mainly presents the following characteristics:
First, the core of the bank is the shadow of the bank. From the debt side, banks are the main providers of funds for non bank financial institutions and shadow banks; from the asset side, most of the customers of shadow banks are bank customers, which are channel business in essence.
For example, the Internet financial platform should only undertake the functions of information intermediary and payment intermediary, but in fact, it is engaged in fund credit activities such as loans, and has been in a regulatory vacuum for a long time.
Fourth, the profit model of charging channel fees is more common. Most of the shadow banking products in China are due for subscription and holding, with low liquidity, winning by volume and competing for market share. Earning channel management fee is the main source of profit.
The definition of shadow banking in China follows four standards
The research group believes that the determination of Chinas shadow banking standards must take into account the common characteristics of international standards for shadow banking and the characteristics of Chinas shadow banking.
There are four main standards for the definition of shadow banking in China
First, financial credit intermediary activities are outside the banking regulatory system, and the credit granting standard is significantly lower than that of bank credit. It mainly includes all kinds of credit businesses which are not subject to the prudential supervision standards of commercial banks.
Second, the business structure is complex, nested layer by layer and the leverage is too high. Release hierarchical products, distinguish priority, intermediate level and inferior level, some involve account splitting and multi-layer nesting.
Third, incomplete information disclosure and low transparency. During the existence of the product, the underlying asset information is not disclosed completely or not fully.
Fourth, the pressure of centralized cashing is high, and the financial system is highly related and risk infectious. A variety of products with collective investment as the main business model have obvious term conversion effect, which is an important feature of shadow banking. When the risk signs of investment products appear, herd psychology will induce broken window effect, which is easy to cause run impact.
Chinas shadow banking can be divided into broad sense and narrow sense
According to the above-mentioned criteria, the report divides Chinas shadow banking into broad sense and narrow sense.
Among them, the generalized shadow banking is a kind of financial products and activities that basically meet the four criteria.
In the narrow sense, shadow banking is the product and activity with more obvious characteristics and more prominent risk degree.
Shadow banking in broad sense mainly includes:
Interbank specific purpose vehicle investment, entrusted loan, fund trust, trust loan, bank financing, non stock public offering fund, securities industry asset management, insurance asset management, asset securitization, non equity private equity fund, online lending P2P institutions, financial leasing companies, small loan companies, commercial factoring companies, financing guarantee companies in the insurance business, non licensed Consumer loans issued by institutions, debt financing plans provided by local exchanges and structured financing products.
High risk shadow banks in narrow sense include:
The investment of special purpose vehicles in the same industry, interbank financial management, bank financing, entrusted loan, trust loan, network lending, P2P loan and non equity private equity fund invested in non-standard creditors rights and asset management.
Establish and improve the continuous supervision system of shadow banking
Since the beginning of 2017, Chinas shadow banking began to focus on rectification, and the scale of shadow banking has declined significantly from its historical high.
By the end of 2019, the generalized shadow scale has dropped to 84.80 trillion yuan, nearly 16 trillion yuan less than the historical peak of 100.4 trillion yuan in early 2017. The proportion of shadow banking in GDP dropped from 123% at the end of 2016 to 86% at the end of 2019; the scale of shadow banking in narrow sense dropped to 39.14 trillion yuan, which was 11.87 trillion yuan less than that at the end of 2016.
At the same time, illegal activities have decreased significantly, and the market order has been restored; the risk level has changed from divergence to convergence, which has found out the risk base, reduced the stock risk and improved the risk resistance ability; the international evaluation tends to be positive; it has won the first opportunity for financial support and anti epidemic and resumption of work and production, and has reserved space for the substantial growth of credit, thus avoiding further risk accumulation This eliminates the hidden danger of risk concentration and effectively avoids the rapid rise of leverage ratio.
After 2017, there has been a complete change in international evaluation, fully affirming the remarkable achievements of Chinas shadow banking governance, believing that it not only ensures the stability of Chinas financial system, but also becomes the main driving force for the decline of global shadow banking scale. The report shows.
With regard to the direction and focus of supervision, the report points out that Chinas shadow banks have accumulated for a long time and their stock risks are relatively high. Quite a number of financial institutions still have scale complex, various implicit guarantees and rigid cashing have not been really broken, and sellers are responsible and buyers are responsible has not been established, and some high-risk shadow banks may make a comeback by improper innovation.
First, improve statistical monitoring. Shadow banking has the essence of regulatory arbitrage, its product structure and organizational form are always evolving, and various innovative methods emerge in endlessly. Shadow banking across different industries, incomplete data, inconsistent caliber and double counting still exist. Therefore, we must continue to improve the statistical monitoring, timely and dynamically grasp the scale and types of shadow banking, especially the risk evolution path and risk level changes.
It is difficult to achieve high frequency statistical monitoring of shadow banking. The subject group told reporters that the availability of data, the lag of data, and the processability of data are important factors affecting the statistical monitoring of shadow banking. At present, we hope to get preliminary data every quarter. But the frequency of accurate data acquisition may be lower.
In the statistical monitoring of shadow banking, double counting is one of the difficulties. According to the research group, Chinas shadow banking is mainly channel business, and a product may be in the same chain through bank financing, trust, asset securitization, etc. If the sum is simple, the scale will be enlarged, and the technical requirements for eliminating the repeated calculation are also very high.
Second, we must guard against rebound and resurgence. Focus on outstanding problems and risk points, set up forbidden zone for shadow banking and cross financial business, prohibit multi-layer nested investment, capital idling, turning from real to virtual, complex structure products and business resurgence, as well as false innovation and pseudo innovation; complete business restructuring on time and in compliance with regulations, handle risks in a safe and orderly manner, and actively adjust business model to accelerate the transformation of net value.
Third, establish risk isolation. The focus is to clarify the boundaries between public offering products and private equity products, on balance sheet business and off balance sheet business, between entrusted business and self operated business, and to establish corresponding firewalls. We should strictly prevent risks from infecting, interweaving and concealing each other. Fourth, improve the regulatory system. To ensure the full coverage of supervision, including all shadow banking activities; to unify the regulatory standards of similar institutions and products; to improve the risk classification, risk weight, capital provision and other standards of shadow banking. Fifthly, we should carry out comprehensive management carefully. Commercial banks should be based on prudent operation, insurance should play a role of risk dispersion and protection, securities funds should reflect the intermediary function of value investment, trust and financial management should return to the functional orientation of entrusted and managed by others, and a financial system with comprehensive coverage, reasonable division of labor and orderly flow should be established. Editor: Chen Yu source: Shanghai Securities News Author: Zhang Jones editor in charge: Zhong Qiming_ NF5619
Third, establish risk isolation. The focus is to clarify the boundaries between public offering products and private equity products, on balance sheet business and off balance sheet business, between entrusted business and self operated business, and to establish corresponding firewalls. We should strictly prevent risks from infecting, interweaving and concealing each other.
Fifthly, we should carry out comprehensive management carefully. Commercial banks should be based on prudent operation, insurance should play a role of risk dispersion and protection, securities funds should reflect the intermediary function of value investment, trust and financial management should return to the functional orientation of entrusted and managed by others, and a financial system with comprehensive coverage, reasonable division of labor and orderly flow should be established.