Chinese regulators are allowing lines to blur between traditional banking and lightly regulated Internet-based finance, The Wall Street Journal reports. Many institutions established amid government efforts to increase financial innovation use a more aggressive business model, selling small-time investors short-term, high-yield products online. But Moody’s Investors Service recently warned that such blurring in China’s banking industry is a sign of the “evolving and elusive nature of risks in the financial system.” China says 1,200 nonbank financial firms have faced problems returning money to investors this year. CLSA said in a recent report that shadow-bank lending could amount to 59% of gross domestic product and stands to worsen bad-loan problems for the country’s banks.
Categories