Room for shadow banking to rise
By Hu Xiaocen |
June 28, 2013, Friday
|
Print Edition
Print Edition
CHINA'S recent cash squeeze may have sparked criticism of the shadow banking system as posing a systemic risk to traditional banking, but economists argued that the grey sector is like "a naughty boy doing the right thing."
"The shadow banking system lowers transaction costs, it's more customer-oriented (than the traditional system) and broadens the financing channel, which are the positive sides of shadow banking," Lu Zhengwei, chief economist at the Industrial Bank, said during the Night Chat by the Huangpu River yesterday, part of the three-day Lujiazui Forum.
"So the shadow banking system is a bad kid doing the good things. We should take advantage of the benefits," he said.
Yan Hong, deputy director of Shanghai Jiaotong University's Finance Research Institute, also sees the positive aspects as the system is complementary to the traditional banking system.
"The shadow banking system stemmed out from the existing financial system that is not advanced, nor reasonable. The financial system needs to improve. Interest rate liberalization and capital market development will provide more channels for investors," Yan said.
Zhu Haibin, chief economist at JPMorgan Chase for China, said there's room for the shadow banking to grow as its size, including all the lending made outside the banking system, is only about 36 trillion yuan.
"The shadow banking system lowers transaction costs, it's more customer-oriented (than the traditional system) and broadens the financing channel, which are the positive sides of shadow banking," Lu Zhengwei, chief economist at the Industrial Bank, said during the Night Chat by the Huangpu River yesterday, part of the three-day Lujiazui Forum.
"So the shadow banking system is a bad kid doing the good things. We should take advantage of the benefits," he said.
Yan Hong, deputy director of Shanghai Jiaotong University's Finance Research Institute, also sees the positive aspects as the system is complementary to the traditional banking system.
"The shadow banking system stemmed out from the existing financial system that is not advanced, nor reasonable. The financial system needs to improve. Interest rate liberalization and capital market development will provide more channels for investors," Yan said.
Zhu Haibin, chief economist at JPMorgan Chase for China, said there's room for the shadow banking to grow as its size, including all the lending made outside the banking system, is only about 36 trillion yuan.
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