Document Type

Working Paper

Publication Date



The rapid but largely unregulated growth in shadow banking in developing countries such as China can jeopardize financial stability. This article discusses that growth and argues that a regulatory balance is needed to help protect financial stability while preserving shadow banking as an important channel of alternative funding. The article also analyzes how that regulation could be designed.

Library of Congress Subject Headings

Nonbank financial institutions, Financial institutions--Law and legislation, Financial risk management, Financial crises, International finance, China