Abstract
This article uses 2008-2018 data from China’s commercial banks to analyze the impact of shadow banking on banks’ loan loss provisions. The results of this study show that shadow banking is significantly positively correlated with the loan loss provisions for commercial banks in China. The research conclusions of this paper have positive significance for preventing the risks brought by shadow banking to Chinese commercial banks.
Highlights
With the development and deepening of finance, in order to meet the demand for financial resources for economic development and improve the efficiency of resource allocation in financial markets, shadow banking and institutions have begun to emerge
The results of this study show that shadow banking is significantly positively correlated with the loan loss provisions for commercial banks in China
In June 2012, the former China Banking Regulatory Commission issued the “Capital Management Measures for Commercial Banks (Trial)”, which stipulated that the core capital adequacy ratio of commercial banks must not be lower than 5% and the total capital adequacy ratio must not be lower than 8%
Summary
With the development and deepening of finance, in order to meet the demand for financial resources for economic development and improve the efficiency of resource allocation in financial markets, shadow banking and institutions have begun to emerge. The bubble-like expansion has huge risks, especially the shadow banking has eroded the original financial landscape, squeezed the market share of traditional finance, and affected the commercial banks’ business behavior and risk control decisions. These studies have improved our understanding of issues related to China’s shadow banking, but it is worth pointing out that most of the existing studies have studied the impact of shadow banking on the financial system from a macro level, or they have to use theoretical models to analyze the effects of shadow banking and monetary policy It has rarely dealt with important issues such as how traditional commercial banks deal with shadow banking. This article mainly studies the impact of shadow banking on commercial banks’ loan loss provisions
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
