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1. The significance of understanding the dissertation topic is that China has become the second largest economy. Since China has reformed for three decades, and now is a key driver to the global economy. Given this fact, China can produce spillovers to other countries’ economy through channels such as trading, supply chain, foreign exchange reserve and offshore renminbi markets. In China, the stimulus package in 2008 fuelled the growth of shadow banking, which has played an important role to meet the demand from depositors looking for higher return and from borrowers who invest in real economy. 2. Characteristics in shadow banking were present in history that dates back to the 18^th century. Shadow banking activities proliferated during 1970 by a dominant form of structured finance –securitization. It is not until August 2007 that the term ‘shadow banking’ was introduced. After studying various definitions, shadow banking has the characteristics of credit intermediation involving savers and borrowers, thus it is subject to maturity mismatch; it is outside regular banking and has no liquidity support nor under any deposit insurance from government; it has little or no capital reserve requirement and is able to create money. Due to these characteristics, shadow banking can inflict a systemic risk on a financial system as a whole. It is interconnected by its relative size and multiple linkages. Thus the systemic risk that shadow banking causes to financial systemic can be concluded as susceptibility to ‘run’ the shadow banks and amplifying negative effect of high leverage. 3. The Chinese financial industry is monopolised by banks; financing activities are mainly conducted through the banking system. The government has high level of ownership and control over the five largest banks which are motivated to lend to state-owned enterprises. The private entities would gain the needed credit from shadow banks directly or via the financial products. Modified from definition of the FSB, China’s shadow banking should be defined as a system of chain intermediation activities and entities outside regular banking system or within it but falling outside scope of regulation. The dissertation discussion would be limited to better developed institutions and investment products. It is analysed that the most risky area of shadow banking is its wealth management products originated from the financial institutions that could build up leverage in the form of off-balance sheet transaction. Secondly, systemic risk that Internet financial institution bears could be significant. Internet create is closely interconnected with the regular banking through the channel money market fund. It also would accept deposit that is not guaranteed and the fund is prone to misappropriation. 4. During periods of economic stability, the government introduced a number of regulations on shadow banking. The Document 107 released by China in late 2013 is the first regulation which sets out a framework and general principles to monitor and regulate it. It is binding on all regulators who are required to coordinate with each other. This will help build up macro prudential measures to regulate shadow banking. Secondly, the wealth management business in banks and trust companies arguably creates the most significant systemic risk due to its wealth management products being intertwined with regulated banks. A number of regulations have been released in response to industry development and changes in economy, however comprehensive legislations are still missing. The shadow banking activities in China are not entirely unregulated. Any individual undertaking fundraising from the general public without proper authorisation from the government can be prosecuted for illegal fundraising under Criminal Law. The severity of the punishment should deter the activities of underground banking and unauthorised deposit taking. 5. The Chinese government will only intervene more proactively when shadow banking poses a rising risk to the economy, as the government viewed it as a necessity. Removing the ceiling on deposit rates is arguably an effective means of curbing shadow banking. To ease the pressure of liberalising deposit rates, one way would be through Internet finance which could help develop the financial industry and bring in more competition. If the government wants to control the growth of Internet finance, they could introduce varying degrees of regulations. One way is the law prohibiting illegal fundraising. However, it is clear that the Chinese government is reluctant to regulate Internet finance and therefore it is likely to remain unregulated for the foreseeable future. 6. In addition to regulating shadow banking during periods of economic stability and when risk is building up, it is important to assess the tools the Chinese government could employ when a financial crisis is imminent. The tools should be able to address systemic risks by shadow banking to the financial system. It is concluded that ‘guaranteed payout’ would prevent a ‘run’ in financial industry. Additionally, the government’s control on banks allows early intervention which is likely to be an effective tool in counteracting the amplifying negative effect of high leverage. 7. Since China is not an open economy like developed countries, it can exercise influence on the financial industry. Therefore they can employ their regulatory tools more flexibly. In light of the above, it is submitted that China should be able to manage the risks posed by shadow banking to financial sector1. 理解本论文主题的意义在于：中国已跃升为全球第二大经济体。历经三十年改革开放，中国现已成为全球经济的关键驱动力。基于此事实，中国可通过贸易、供应链、外汇储备以及离岸人民币市场等渠道，对他国经济产生外溢效应。2008年的经济刺激计划助推了影子银行（shadow banking）的发展，后者在满足储户追求高收益的需求，以及为投资实体经济的借款人提供融资方面发挥了重要作用。 2. 影子银行的相关特征可追溯至18世纪的历史实践。1970年代，以结构化金融的主导形式——证券化（securitization）为载体，影子银行活动迎来爆发式增长。直至2007年8月，“影子银行”这一术语才被正式提出。在梳理各类定义后可知，影子银行具备连接储蓄者与借贷者的信用中介属性，因此存在期限错配问题；它游离于正规银行体系之外，既无流动性支持，也未获得政府的存款保险保障；几乎或完全无需缴纳资本准备金，且能够创造货币。基于上述特征，影子银行可能对整体金融体系造成系统性风险（systemic risk），其通过相对规模与多重关联形成互联性，因此影子银行引发的金融系统性风险可归纳为两类：一是影子银行易遭遇“挤兑”，二是会放大高杠杆的负面效应。 3. 中国金融业由银行体系垄断，融资活动主要通过银行体系开展。政府对五大国有商业银行拥有高度的所有权与控制权，这些银行倾向于向国有企业发放贷款。民营企业则可直接或通过金融产品从影子银行获取所需信贷。参照金融稳定理事会（Financial Stability Board, FSB）的定义，中国影子银行应被界定为正规银行体系之外、或虽在体系内但不受监管覆盖的链式中介活动与实体构成的体系。本论文的讨论将局限于发展较为成熟的金融机构与投资产品。分析表明，影子银行中风险最高的领域是金融机构发行的理财产品，这类产品可通过表外交易形成杠杆。其次，互联网金融机构面临的系统性风险可能不容忽视。互联网金融通过货币市场基金渠道与正规银行紧密互联，同时其吸收的存款无担保，资金易被挪用。 4. 在经济稳定时期，中国政府出台了多项针对影子银行的监管政策。2013年末发布的“107号文”是首个搭建监管框架与通用原则的规制文件，要求所有监管机构协同配合，有助于构建宏观审慎（macro prudential）监管框架以规范影子银行。其次，银行与信托公司的理财业务可被认为是引发最显著系统性风险的领域，原因在于其理财产品与受监管银行深度绑定。尽管政府针对行业发展与经济形势变化出台了多项监管政策，但综合性立法仍付阙如。中国的影子银行活动并非完全不受监管：任何未经政府合法授权向公众募资的个人，均可依据《中华人民共和国刑法》（Criminal Law）以非法吸收公众存款罪被追责。刑罚的威慑力度可有效遏制地下钱庄与非法揽储行为。 5. 中国政府仅会在影子银行对经济构成日益严峻的风险时采取更主动的干预，其将影子银行视为一种必要存在。取消存款利率上限可被视为抑制影子银行的有效手段之一。为缓解存款利率市场化的压力，互联网金融可助力金融业发展并引入更多市场竞争。若政府希望管控互联网金融的发展，可出台不同程度的监管政策，其中一种方式便是通过禁止非法募资的法律。但显而易见，中国政府不愿对互联网金融施以严格监管，因此在可预见的未来，互联网金融仍大概率处于监管空白地带。 6. 除了在经济稳定时期与风险积聚阶段监管影子银行外，评估中国政府在金融危机迫近时可采用的应对工具同样至关重要，这些工具需能够化解影子银行给金融体系带来的系统性风险。研究结论显示，“保本兑付”机制可防范金融行业出现“挤兑”。此外，政府对银行的控制权可支持早期干预，这一手段或能有效抵消高杠杆的负面放大效应。 7. 由于中国并非像发达国家那样的开放经济体，其可对金融业施加自主影响，因此能够更灵活地运用监管工具。基于上述分析，本文认为中国有能力管控影子银行给金融领域带来的风险。