Shadow Funding and Economic Growth: Evidence from China |
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| Authors: | XU FENG XIAOWEN AN YAHUI AN YAJUN XIAO |
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| Institution: | 1. Xu Feng is a Professor at College of Management and Economics, Tianjin University.;2. Xiaowen An is a student at College of Management and Economics, Tianjin University.;3. Yahui An is an Assistant Professor at School of Economics, Tianjin University of Commerce.;4. Yajun Xiao is an Associate Professor at International Business School Suzhou, Xi'an JiaoTong-Liverpool University (E-mail: yajun.xiao@xjtlu.edu.cn). |
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| Abstract: | Using popular liability-side wealth management products in China, we construct an informative measure of shadow funding and shadow credit by extension. This measure reflects the risk appetites of financial intermediaries and their ability to expand their balance sheets through bank–shadow-bank cooperation. Our measure possesses unique predictive power for future economic activity. An increase in the measure corresponds to increases in investment and consumption, which, in turn, reduce financing costs due to improvements in economic development. |
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| Keywords: | wealth management products shadow funding shadow credit intermediary economic activity |
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