Credit Black Market

Dominique Rambures and Felipe Escobar Duenas
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Dominique Rambures: Paris I University Panthéon Sorbonne
Felipe Escobar Duenas: Paris I University Panthéon Sorbonne

Chapter 6 in China’s Financial System, 2017, pp 75-89 from Springer

Abstract: Abstract According to a central bank annual report (2015), non-bank lending accounts for 30% of the total bank credit in China. In the same report, there is a discrepancy between the growth of money supply and the growth of credit supply. Given that money creation is owed primarily to bank credit, there is a leak in the money supply. A number of companies and households that have no access to bank credit turn to the informal credit market. In this regard, the fast growth of non-bank lending is a sign of a financial system that is unsuitable for the needs of the economy. However, informal credit is not specific to China. In the UK, non-banking credit accounts for 3.5 times GDP and 8 times the volume of banking credit [1]. In China the high level of non-bank credit is both a sign of a highly sophisticated alternative source of lending and a remnant of old lending practices.

Keywords: Central Bank; Bank Loan; Bank Credit; Investment Company; Interbank Market (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-319-40451-6_6

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DOI: 10.1007/978-3-319-40451-6_6

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