Chinese joint-stock commercial lenders’ aggressive expansion in off-balance-sheet activities is creating a serious risk to the financial system that requires regulatory attention, a new report by the Tsinghua University National Institute of Financial Research says. Lenders like China Minsheng Bank are increasingly engaged in businesses such as “shadow banking” – lending that is often speculative and little-regulated that occurs beyond official banking channels. Such businesses also include “entrusted investments,” or funds that banks lend to external asset managers to invest in bonds, stocks and commodities. Regulators say this creates multiple layers of investments with high level of leveraging, therefore making financial markets vulnerable if a liquidity shock were to occur, according to Caixin. China’s shadow banking assets grew to 64.5 trillion yuan ($9.35 trillion) in 2016, an increase of 21% from the previous year, according to Moody’s. Shadow banking assets accounted for 87% of the country’s GDP and 28.5% of total banking assets in 2016.