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The impact of shadow banking on the implementation of Chinese monetary policy

Gabrieli, T., Pilbeam, K. & Shi, B. (2017). The impact of shadow banking on the implementation of Chinese monetary policy. International Economics and Economic Policy, doi: 10.1007/s10368-017-0397-z


This paper empirically analyses the relationship between the shadow banking system and implementation of monetary policy in China using the VECM methodology. We show that an increase in the size of shadow banking sector increases the independence of bank lending from the policies of the People Bank of China. We also find that Shadow Banking works in an asymmetric fashion in that it amplifies increases in the money supply but weakens the effects of restrictive interest rate-based monetary policy decisions.

Publication Type: Article
Additional Information: © 2017 The Author(s) This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (, which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Publisher Keywords: Shadow banking, Chinese economy, Monetary policy
Departments: School of Policy & Global Affairs > Economics
Text - Published Version
Available under License Creative Commons Attribution.

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