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China’s banking industry

Abstract:

This chapter describes the dual structure of China’s banking, traditional banking and shadow banking, and explains why it exists. It presents detailed pictures of the two banking sectors and analyzes the players, profit patterns and risks of traditional banking and shadow banking. It argues that, although China’s shadow banking is often criticized for its potential risks due to weak risk management and government supervision, shadow banking contributes to China’s economic growth by supplying capital to private firms, which cannot obtain bank loans as easily as SOEs. Meanwhile, the chapter introduces the recent developments of China’s private banking and P2P banking. Different strategies of developing China’s ...

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