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Shadow Banking in China

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Book cover Chinese Banking Reform

Part of the book series: The Nottingham China Policy Institute Series ((NCP))

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Abstract

Over the last few decades, the financial system has gone through enormous transformation due to a number of driving forces, such as globalization, financial liberalization, financial innovation, and technological advancement. Development in information and communication technologies has blurred the boundaries of different segments of the financial system. Both banks and non-bank institutions/intermediaries take advantage of arbitrage opportunities in information, regulation, price and taxation systems and engage in off-balance sheet activities for profit. Financial institutions have become more closely interconnected in a global network through financial derivatives and highly leveraged products. The disastrous global financial crisis in 2008–2009 showed the contagion effect among the financial systems in major developed economies, for which shadow banking activities have been considered by many scholars and authorities as one of the important causes for the crisis. Subsequently, the shadow banking system has become the centre of the governments’ emergency policy in response to the crisis.

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Notes

  1. 1.

    FSB is an international body that monitors and makes recommendations about the global financial system. FSB was established in 2009 and its original charter was endorsed by the heads of state and government of the G20. On 28 January 2013, the FSB was established as a not-for-profit association under Swiss law with its seat in Basel, Switzerland. The FSB has assumed a key role in promoting international financial regulatory reform.

  2. 2.

    Up to 2014, the report covers 20 individual non-euro area jurisdictions (namely Argentina, Australia, Brazil, Canada, Chile, China, Hong Kong, Indonesia, India, Japan, Korea, Mexico, Russia, Saudi Arabia, Singapore, Switzerland, Turkey, United Kingdom, United States, and South Africa) and the Eurozone (the euro area aggregate). Since 2015, the report covers 26 jurisdictions (including six individual euro area countries) and extends to 27 jurisdictions in 2017.

  3. 3.

    The newly introduced narrow measure in 2015 may be subject to some degree of change in future reports.

  4. 4.

    The 21 jurisdictions include Argentina, Australia, Brazil, Canada, Cayman Islands, Chile, China, Hong Kong, Indonesia, India, Japan, Korea, Mexico, Russia, Saudi Arabia, Singapore, Switzerland, Turkey, United Kingdom United States, and South Africa.

  5. 5.

    The policy did keep the total credit to GDP ratio round 140% in the following two years, but since 2012, the total credit to GDP ratio has been growing much faster and reached 193% in 2015.

  6. 6.

    For example, seven regulatory bodies oversee guarantee enterprises, including the central bank, CBRC, National Development and Reform Commission, Ministry of Finance, Ministry of Commerce, Ministry of Industry and Information Technology, and State Administration for Industry and Commerce (Yan and Li 2014).

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Authors and Affiliations

  1. Middlesex University, London, UK

    Chunxia Jiang

  2. University of Nottingham, Nottingham, UK

    Shujie Yao

  3. Chongqing University, Chongqing, China

    Shujie Yao

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  1. Chunxia Jiang
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Correspondence to Chunxia Jiang .

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Jiang, C., Yao, S. (2017). Shadow Banking in China. In: Chinese Banking Reform. The Nottingham China Policy Institute Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-63925-3_6

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  • DOI: https://doi.org/10.1007/978-3-319-63925-3_6

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-63924-6

  • Online ISBN: 978-3-319-63925-3

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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