Shadow financing through off-balance sheet wealth management products (WMPs) has become increasingly important besides deposits in China. We quantify the economic magnitude of the effect of WMPs on banking stability in an equilibrium model calibrated to Chinese banking sector data. Alternative...

Systemic risk is a key concern for central banks charged with safeguarding overall financial stability. In this paper we investigate how systemic risk is affected by the structure of the financial system. We construct banking systems that are composed of a number of banks that are connected by...

We study how competition for shadow money impacts banking stability. In our model, bankscompete for insured depositors and uninsured shadow money investors and default endogenously.We estimate and calibrate our model to the Chinese banking sector and we find that shadow money investors are...