Author(s): Cindy Li
Although bank loans still account for the majority of credit provided to China’s real sector, other channels of credit extension are growing rapidly. Credit extension activities outside commercial banks’ balance sheets are generally referred to as shadow banking. According to Standard & Poor’s, China’s shadow banking credit has been growing at an annualized rate of 34 percent since year-end 2010. This Asia Focus provides an overview of shadow banking activities in China, their close ties with banks, reasons behind their rapid rise, the range of participants and products, and regulatory issues.
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