Global Liquidity,Offshore Bond Issuance and Shadow Banking in China

Shugo Yamamoto

No 2011, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: In China, to benefit from abundant global liquidity, offshore affiliates of non-financial companies have been increasingly used as financing vehicles for accumulating low-yield US dollar liabilities. To elucidate this issue and its implications, we specifically examine offshore bond issuance, within-company flows, and shadow banking. Results indicate that a global liquidity shock will increase shadow banking, as represented by entrusted loans in China. In spite of strict financial restrictions, about 20% of the variance of shadow banking is explained by global liquidity shocks.

Pages: 39 pages
Date: 2020-07
New Economics Papers: this item is included in nep-fmk
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