Economic policy uncertainty, non-financial enterprises' shadow banking activities and stock price crash risk

At present, the structural contradiction between Economic Financialization and the real econo-my's long-term weakness has become increasingly prominent. As China enters a "new normal" stage of economic growth, the real investment rate drops, non-financial enterprises continuously allocate resources to the shadow banking system. The financial economy becomes increasingly divorced from reality.This leads us to the questions: will the shadow banking behavior of non-financial companies exacerbate the risk of stock price crash risk? How does the increase in economic policy uncertainty affect the relationship between non-financial companies' shadow banking activities and stock price crash risk? This article uses non-financial listed companies' data from 2007 to 2017 and conducts empirical analysis to answer this question. The study finds that companies engaged in high -leverage, high-risk shadow banking business exacerbate stock crash risk. This effect is only pronounced in non-state-owned enterprises and low social trust regions. The increase in the de-gree of economic policy uncertainty positively impacts the relationship between non-financial companies' shadow banking business and stock price crash risk. The theoretical mechanism is as follows: the rise in economic policy uncertainty amplifies the positive relationship between shadow banking activities of non-financial companies and stock price crashes by increasing bank loans, investors' sensitivity to external information, risk cross-contagion, and inefficient invest-ment mechanisms. Various robustness tests do not change the research conclusion. This paper has important theoretical and policy guidance significance for reviewing the existing diversified shadow banking system and preventing systemic risks.