The shadow of China

The U. S. subprime mortgage crisis of 2008 provoked a global discussion in academic and regulatory circles about the so-called “shadow banking”, the regulators of financial systems and the rapid financial liberalization and deregulation.

“Shadow banking exists alongside the formal banking system, offering similar kinds of services, but it is lightly or not regulated at all. Its institutions are therefore highly leveraged and more prone to failure or “bank runs” (for example, liquidity shocks)”, mentions Dawa Sherpa in her article in Economic & Political Weekly some years ago[1]. Continue reading