Moody’s: China’s shadow banking industry continues to shrink, nationwide leverage set to rise further
|Moody’s says China’s shadow banking industry continues to shrink but the nationwide leverage is set to rise further.
Money creation by banks beyond traditional loans had played an important role in China's money-creation process but activity has posed a number of challenges to monetary policy operations and financial risk management. Cracks are forming in the sprawling shadow-banking sector as the coronavirus weighs on the economy.
According to the Wall Street Journal, since early February, "several finance companies and online lending platforms have told investors they can’t produce the returns they previously promised, due to rising distress among businesses they funded."
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