Shadow banking, financial regulation, and bank risk in China

Yan Dong, Mengyao Dong, Suhang Tan and Ran Ge

Finance Research Letters, 2024, vol. 63, issue C

Abstract: China's 2018 rules on wealth management products (WMPs) have led to determined efforts by regulators to reduce risk in the shadow banking system. Through theoretical model and empirical testing, we explore the impact of the regulation on WMPs and bank performance. Our study finds that after the regulation, banks changed the issuance structure and their profit and risk reduced. The capital did not flow back to on-balance sheet business and the return of WMPs decreased after the regulation.

Keywords: Shadow banking; Financial regulation; Wealth management products (WMPs); Bank risk (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003234

DOI: 10.1016/j.frl.2024.105293

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