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Shadow Banking, C hinese Style
Author(s) -
Sharma Shalendra D.
Publication year - 2014
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/ecaf.12086
Subject(s) - shadow (psychology) , intermediation , systemic risk , shadow banking system , business , financial system , financial intermediary , government (linguistics) , retail banking , service (business) , economics , finance , financial crisis , market liquidity , marketing , psychology , linguistics , philosophy , psychotherapist , macroeconomics
Shadow banks are broadly defined as entities which conduct credit intermediation outside the formal banking system. Poorly regulated, engaging in opaque forms of intermediation, deeply interconnected with the official banking system, and operating with implicit government guarantees, they pose a major source of systemic risk. Yet shadow banks provide an important service by channeling credit to excluded investors, and can complement the formal banking sector. What explains the rapid proliferation of shadow banks in C hina? How large are they and what forms do they take? What types of risks do they pose to the financial system? And how best can C hina utilise the services of shadow banks while at the same time ensuring that they do not create systemic risks for the financial system?