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A comparative study of shadow banking activities of non-financial firms in transition economies

Julan Du, Chang Li and Yongqin Wang

China Economic Review, 2017, vol. 46, issue S, S35-S49

Abstract: Shadow banking activities in transition economies have drawn scant attention in the literature. This paper examines a particular form of shadow banking business embedded in the operation of non-financial firms in China and transition economies in Central and Eastern Europe (CEE), in which firms borrow in order to lend. We verify its existence, especially in China and Russia, by two strategies to track the abnormal correlations between financial accounts. By exploring the national/regional variations, we find that a better development of financial market and legal system deters firms in both CEE and China from engaging in re-lending business. We also confirm that Chinese firms participate less actively in re-lending if they have better growth prospects and are located in cities with better development of high-tech industries.

Keywords: Shadow banking; Re-lending; Transition economies; Non-financial firms; Financial intermediaries (search for similar items in EconPapers)
JEL-codes: G23 G28 G32 L21 (search for similar items in EconPapers)
Date: 2017
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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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