Regulating shadow banking

Wealth management products, underground finance and off-balance-sheet lending may affect health of credit flow

Shadow banking can broadly be described as the system of credit intermediation involving entities and activities outside the regular banking system. In developed countries, the biggest shadow banking players are usually hedge funds, venture capital and private equity funds.

However, in China, shadow banking has mainly taken the form of a large amount of wealth management products, or WMPs as they are known, underground finance and off-balance-sheet lending.