Shadow banking and commercial bank: evidence from China

Jing Zhang, Zhanpeng Bi, May Hu and Qingzhu Meng

Applied Economics, 2023, vol. 55, issue 1, 72-89

Abstract: In China, commercial banks participate in shadow banking activities through interbank or channel businesses, which should be called bank’s shadow banking activities. Based on the co-opetition game model, we first analyse the fund flow mechanism between bank’s shadow banking and traditional credit business, which confirms that the greater the proportion of bank’s shadow banking investment, the higher the bank profit. By sampling 147 commercial banks in China during 2003 to 2019, we empirically study the impact of bank’s shadow banking on the individual risk of commercial bank by OLS regression and on the systemic risk of banks through the randomized effect model from the micro-level. The results confirm that Chinese bank’s shadow banking will increase the individual operating risk of commercial bank and its rapid development will increase the probability of banking system risk. Meanwhile, we find that global financial crisis has no significant effect on the risk of individual banks or banking systems, but the regulatory overhaul of bank’s shadow banking activities can significantly inhibit the individual bank’s operational risk, especially for listed banks.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2022.2055741 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:55:y:2023:i:1:p:72-89

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2022.2055741

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().