What we learn from China's rising shadow banking: Exploring the nexus of monetary tightening and banks' role in entrusted lending
| Autor: | Chen, Kaiji, Ren, Jue, Zha, Tao |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2016 |
| Předmět: |
G28
China Geldpolitik balance sheet small banks risk taking institutional asymmetry nonbank trustees shadow loans optimal decisions Bankrisiko Regulatory arbitrage Kreditrisiko Bankrechnungslegung ddc:330 G11 G12 nonloan investment E5 Bankenregulierung asset pricing Informeller Finanzsektor bank loans large banks E02 entrusted loans |
| Popis: | We argue that China's rising shadow banking was inextricably linked to potential balancesheet risks in the banking system. We substantiate this argument with three didactic findings: (1) commercial banks in general were prone to engage in channeling risky entrusted loans; (2) shadow banking through entrusted lending masked small banks' exposure to balance-sheet risks; and (3) two well-intended regulations and institutional asymmetry between large and small banks combined to give small banks an incentive to exploit regulatory arbitrage by bringing off-balance-sheet risks into the balance sheet. We reveal these findings by constructing a comprehensive transaction-based loan dataset, providing robust empirical evidence, and developing a theoretical framework to explain the linkages between monetary policy, shadow banking, and traditional banking (the banking system) in China. |
| Databáze: | OpenAIRE |
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