Study reveals how China's monetary policy fuels shadow banking and bank risk
Peer-Reviewed Publication
Updates every hour. Last Updated: 7-Nov-2025 01:11 ET (7-Nov-2025 06:11 GMT/UTC)
New research employing advanced machine learning techniques reveals that China's collateral monetary policy has significantly stimulated shadow banking growth while increasing bank risks. The study finds this policy creates liquidity distribution distortions, with non-primary banks being particularly vulnerable. Importantly, the 2018 New Asset Management Regulation effectively mitigated these effects, demonstrating the value of targeted regulatory interventions.
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