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What is shadow banking? Unpacking the risks for China
China’s real estate problems have again drawn attention to the world of shadow banking and the risks it poses to the economy. Shadow banking — a term coined in the U.S. in 2007 — refers to financial services offered outside the formal banking system, which is highly regulated. In contrast, shadow bank institutions can lend money to more entities with greater ease, but those loans aren’t backstopped in the same way a traditional bank’s are. That means sudden and widespread demand for payment can have a domino effect. On top of that, limited regulatory oversight of shadow banking makes it hard to know the ... (full story)