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A comparative study of shadow banking activities of non-financial firms in transition economies

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  • Du, Julan
  • Li, Chang
  • Wang, Yongqin

Abstract

Shadow banking activities in transition economies have drawn scant attention in the literature. This paper examines a particular form of shadow banking business embedded in the operation of non-financial firms in China and transition economies in Central and Eastern Europe (CEE), in which firms borrow in order to lend. We verify its existence, especially in China and Russia, by two strategies to track the abnormal correlations between financial accounts. By exploring the national/regional variations, we find that a better development of financial market and legal system deters firms in both CEE and China from engaging in re-lending business. We also confirm that Chinese firms participate less actively in re-lending if they have better growth prospects and are located in cities with better development of high-tech industries.

Suggested Citation

  • Du, Julan & Li, Chang & Wang, Yongqin, 2017. "A comparative study of shadow banking activities of non-financial firms in transition economies," China Economic Review, Elsevier, vol. 46(S), pages 35-49.
  • Handle: RePEc:eee:chieco:v:46:y:2017:i:s:p:s35-s49
    DOI: 10.1016/j.chieco.2016.09.001
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    Cited by:

    1. Cai, Yue, 2021. "Expansionary monetary policy and credit allocation: Evidence from China," China Economic Review, Elsevier, vol. 66(C).
    2. Zhang, Chengsi & Zheng, Ning, 2020. "Monetary policy and financial investments of nonfinancial firms: New evidence from China," China Economic Review, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    Shadow banking; Re-lending; Transition economies; Non-financial firms; Financial intermediaries;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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