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Shadow banking and firm financing in China

Yunlin Lu, Haifeng Guo, Erin H. Kao and Hung-Gay Fung

International Review of Economics & Finance, 2015, vol. 36, issue C, 40-53

Abstract: Shadow banking, an informal, largely unregulated, financial market, has become increasingly important in China because the fact that it is largely unregulated can threaten the viability of the financial system. This study discusses various issues involved in Chinese shadow banking, including the type, size, risk, and reasons behind the growth of this market. Small and medium-size enterprises (SMEs) in China in particular rely on this informal market as they have limited opportunities for obtaining funds in the formal market. Policymakers have to implement financial reforms to incorporate this informal market into the formal one so as to exercise better control and monitoring.

Keywords: Growth; Market impediment; Regulations; Shadow banking; Size (search for similar items in EconPapers)
JEL-codes: E G24 G38 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.iref.2014.11.006

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