The Shadow Banking System and Financial Crisis

The sudden emergence of the shadow banking in recent years has brought about a high degree of prosperity in the United States as well as the international financial market. But because of the highly leveraged operations,the endogenous fragility within the shadow banking system is no doubt one of the most important reasons that leads to the current most serious global financial crisis. The ebb and flow of the system provides a good inspiration for China’s further development in the financial sector. That is,efforts should be made to improve the basic assets quality,strengthen the avoidance of financial risks and supervision of financial institutions and activities.