【Abstract】

We examine wealth management products (WMP) issued by Chinese commercial banks, which are an important part of China’s fast growing shadow banking sector. We document that the WMPs’ maturity dates cluster toward the end of a month and then decrease significantly at the beginning of the following month. Our empirical work detects a negative relationship between a bank’s loan-to-deposit ratio (LDR) at the end of a quarter and the number of its issued WMPs expiring within several days of the quarter-end. Our findings suggest that banks are using WMPs as vehicles for their regulatory arbitrage or window-dressing behaviors.

【Authors】

Cai Jinghan, University of Scranton

Alicia Garcia-Herrero, NATIXIS and Bruegel

Xia Le, IMI Research Fellow, Chief Economist for Asia, Research Department, BBVA