【IMI Working Paper No. 1606 [EN]】Regulatory Arbitrage and Window-dressing in the Shadow Banking Activities

2016-10-27 IMI

【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 【IMI Working Paper No. 1606 [EN]】Regulatory Arbitrage and Window-dressing in the Shadow Banking Activities

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【IMI Working Paper No. 1606 [EN]】Regulatory Arbitrage and Window-dressing in the Shadow Banking Activities

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