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Mapping shadow banking in China: structure and dynamics

Author

Listed:
  • Torsten Ehlers
  • Steven Kong
  • Feng Zhu

Abstract

We develop a stylised shadow banking map for China with the aim of providing a coherent picture of its structure and the associated financial system interlinkages. Five key characteristics emerge. One defining feature of the shadow banking system in China is the dominant role of commercial banks, true to the adage that shadow banking in China is the "shadow of the banks". Moreover, it differs from shadow banking in the United States in that securitisation and market-based instruments play only a limited role. With a series of maps we show that the size and dynamics of shadow banking in China have been changing rapidly. This reveals a marked shift in the relative importance of different shadow banking activities. New and more complex "structured" shadow credit intermediation has emerged and quickly reached a large scale, while the bond market has become highly dependent on funding channelled through wealth management products. As a result, the structure of shadow banking in China is growing more complex.

Suggested Citation

  • Torsten Ehlers & Steven Kong & Feng Zhu, 2018. "Mapping shadow banking in China: structure and dynamics," BIS Working Papers 701, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:701
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    References listed on IDEAS

    as
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    Cited by:

    1. Valentina Bruno & Hyun Song Shin, 2018. "Currency depreciation and emerging market corporate distress," BIS Working Papers 753, Bank for International Settlements.
    2. repec:nbb:ecrart:y:2018:m:june:i:i:p:63-78 is not listed on IDEAS

    More about this item

    Keywords

    shadow banking; wealth management products (WMPs); investment receivables; entrusted loans; trust loans;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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