“…the Risks from Nonbank Intermediation in China,” by Nigel Chalk.
Many China-watchers looked on in awe in 2009 as the government’s response to the global financial crisis unfolded, causing bank lending as a share of the economy to expand by close to 20 percentage points in less than a year. …
[A]t the same time…Various types of nonbank financial intermediaries—some new, some old—were gearing up to provide a conduit through which China’s high savings would be tapped to finance the corporate sector. The available data on this is terrible—the central bank’s numbers on social financing are the only credible and comprehensive public source, but even that gives only a partial picture.
Talking to people in China, and looking at what numbers are available, one cannot help but have an uneasy feeling that more credit is now finding its way into the economy outside of the banking system than is actually flowing through the banks. The means by which such “lending” is being provided is wide-ranging and dynamically evolving.
Certainly many are aware of the high volumes of bankers’ acceptances—off-balance sheet short-term credit—being used of late. Over the past couple of years, trusts and entrusted lending vehicles (China’s own particular form of asset securitization) have also taken off. Then there is the world of informal lending: loan sharks charging high interest rates to those poor souls that are rationed out of regular channels of intermediation. The recent narrative from Wenzhou has certainly excited many.
But the shadows stretch even beyond these tales.
In the 12 months to June, over RMB 600 billion poured into China from short-term lending by nonresidents to Chinese corporations. Financial leasing companies have expanded, providing services that look a lot like credit by another name. The corporate bond market has blossomed, perhaps reaching RMB 1 trillion in new issuance for this year. There is an unknown volume of inter-corporate lending passing from one large company to another. And finally, some nonbank institutions have entrepreneurially moved into the lending space, providing loans to large corporations as a way to boost their profitability.
Dragonomics’ Arthur Kroeber also provides some thoughts on the shadow banking system — with an interesting graph of estimated total lending on page 16 of this presentation. But, as both Chalk and Kroeber observe, this “shadow banking system” is not primarily based on derivatives, but rather more conventional lending.
Estimates lower than Dragonomics’ (if I’m doing my math right) come from Barclays, as cited in this WSJ RTE article:
Figure from M. Gongloff, “China’s Shadow Banking System: The Next Subprime?” WSJ RTE (Sept. 25, 2011).
16 Responses to “‘Lurking in the Shadows…’”
Rhea Baim • November 5th, 2011 at 4:18 pm
Hello! I simply wish to give you a huge thumbs up with the excellent info you’ve got here with this post. I will be returning to your site for more soon.
Web design Philadelphia • November 9th, 2011 at 3:13 am
We’re a group of volunteers and opening a new scheme in our community. Your web site provided us with valuable info to work on. You have done a formidable job and our entire community will be thankful to you.
weathervane • November 10th, 2011 at 1:08 pm
Greetings! I’ve been following your weblog for a while now and finally got the bravery to go ahead and give you a shout out from Atascocita Tx! Just wanted to say keep up the excellent work!
sprinkle mediocre apk • November 11th, 2011 at 1:08 pm
An riveting communication is designer statement. I expect that you should indite author on this issue, it might not be a sacred person but generally group are not enough to speak on much topics. To the succeeding. Cheers like your EconoMonitor : EconoMonitor » ‘Lurking in the Shadows…’.
Retirement Communities in Delaware • November 13th, 2011 at 1:19 pm
This web page is mostly a stroll-by for all of the data you needed about this and didn’t know who to ask. Glimpse here, and you’ll positively uncover it.
GEAR • November 13th, 2011 at 9:26 pm
Spot on with this write-up, I actually feel this site wants a lot more consideration. I’ll probably be once again to go through much far more, thanks for that data.
wedding limo • November 14th, 2011 at 5:46 am
I think this internet site has got some real great information for everyone. “Glory is fleeting, but obscurity is forever.” by Napoleon.
weathervanes • November 14th, 2011 at 10:42 am
With havin so much content do you ever run into any problems of plagorism or copyright infringement? My website has a lot of exclusive content I’ve either written myself or outsourced but it looks like a lot of it is popping it up all over the internet without my agreement. Do you know any methods to help prevent content from being ripped off? I’d genuinely appreciate it.
weathervane cupola • November 15th, 2011 at 1:43 am
I’m truly enjoying the design and layout of your website. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a designer to create your theme? Superb work!
weathervane • November 16th, 2011 at 5:13 am
With havin so much written content do you ever run into any issues of plagorism or copyright infringement? My website has a lot of completely unique content I’ve either created myself or outsourced but it seems a lot of it is popping it up all over the web without my authorization. Do you know any ways to help protect against content from being ripped off? I’d genuinely appreciate it.
55 Communities Delaware • November 16th, 2011 at 7:11 am
Highly rated post. I study something completely new on totally different blogs everyday. Deciding on one . stimulating to learn the paper content from other writers and study a bit one thing from their website. I’d like to use certain of this content on my blog you’re mind. Natually I’ll give a hyperlink here we’re at your web-site. Respect your sharing.
weather vanes • November 16th, 2011 at 8:43 pm
Appreciating the time and energy you put into your website and in depth information you offer. It’s great to come across a blog every once in a while that isn’t the same old rehashed information. Wonderful read! I’ve bookmarked your site and I’m including your RSS feeds to my Google account.
Newark Delaware realtor • November 16th, 2011 at 11:28 pm
I loved as much as you’ll receive carried out right here. The sketch is tasteful, your authored material stylish. nonetheless, you command get got an nervousness over that you wish be delivering the following. unwell unquestionably come further formerly again since exactly the same nearly a lot often inside case you shield this increase.
wilmington • November 16th, 2011 at 11:41 pm
Just like secretly knowing the answer to a question no matter where it is and allowing someone expound on the incorrect response for minutes while inwardly grinning because you feel awesome. No need to rub it in or anything, just knowing you could have done better is good enough.
Personal Injury Lawyers in Philadelphia • November 17th, 2011 at 12:06 pm
Techniki ulatwiajace przyjecie informacji osobom o rozmaitych dysfunkcjach, wzorem chociazby dzwiekowe odtwarzanie tresci (synteza dzwieku), wyjatkowo istotne w celu osob niewidomych takze niedowidzacych.
weather vane cupolas • November 18th, 2011 at 2:12 am
Do you mind if I quote a few of your articles as long as I provide credit and sources back to your blog? My website is in the very same niche as yours and my users would definitely benefit from a lot of the information you provide here. Please let me know if this ok with you. Many thanks!
