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In the shadow of banks: Entrusted wealth management and capital allocation efficiency

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  • Yu, Shuangli

Abstract

We conduct micro-level analyses on an increasingly important type of shadow banking in China—Entrusted Wealth Management (EWM). Using listed firms to mandatory disclosure requirements for this type of activity, we examine the possible economic consequences for firms engaging in transactions involving Wealth Management Products (WMPs) from the perspective of the buyer. We find that EWM can enhance Capital Allocation Efficiency (CAE). And the mechanism analysis indicates that the improvement of capital utilization is the essential approach to the effect of EWM on the CAE. Moreover, the enhancement of CAE has a significantly positive effect on firm value.

Suggested Citation

  • Yu, Shuangli, 2025. "In the shadow of banks: Entrusted wealth management and capital allocation efficiency," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s154461232500217x
    DOI: 10.1016/j.frl.2025.106953
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