Risks in the Chinese shadow banking sector

In this project, we developed a detailed picture of the interaction between the mainstream banks and the shadow banks in China.

We looked at: the role of each in providing finance for industry, for households and for local authorities there; the build-up of bad or non-performing assets; the channels of contagion between different institutions; the potential for the shadow-banking sector to present a systemic threat to the Chinese banking industry as a whole; and ways in which the authorities could mitigate or exacerbate those risks.

The project helped our client to understand better how financial risks in China were evolving, and how they might feed back into the real economy.