Shadow banking is hurting China's banks — and that's a good thing
from CFA Institute's Enterprising Investor
You’ve read all sorts of warnings about the coming car wreck that is shadow banking in China. Several shadow banking products are reportedly on the brink of default, and the fear is this will have a domino effect in the banking sector, the local economy, and the global recovery. No doubt shadow banking in China is large (30 percent of total banking assets, according to JPMorgan’s estimates) and carries unknown risks. But China’s problem is not shadow banking itself, it is a dysfunctional credit system.
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