This book is about the growth of shadow banking in China and the rise of China’s free markets. Shadow Banking refers to capital that is distributed outside the formal banking system, including everything from Mom and Pop lending shops to online credit to giant state owned banks called Trusts....

We perform transaction-level analyses of entrusted loans—one of the largest components of shadow banking in China. Entrusted loans involve firms with privileged access to cheap capital channeling funds to less privileged firms, and increase when credit is tight. Nonaffiliated loans have much...

The global shadow banking system (SBS) continues to increase in size and scope at a steady pace. The Financial Stability Board estimates that in 2014, the global SBS reached 75 trillion USD, which is equivalent to 120% of the GDP of all measured jurisdictions in the world. Advanced economies...

We develop an agent based model of traditional banks and asset managers. Our aim is to investigate the channels of contagion of shocks to asset prices within and between the two financial sectors, including the effects of fire sales and their impact on financial institutions’ balance sheets....

By analyzing a hand-collected transaction-level dataset on the finance leases of China’s public firms for the period 2007-2019, this paper sheds light on China’s financial leasing industry. We find that banks use their affiliated leasing firms to provide credit to constrained clients in...