The varying shadow of China's banking system

The rapid rise of shadow banking activities in China since 2009 has attracted a great deal attention both academia and policy circles. Most existing studies commentary on China's have treated it as recent phenomenon that appeared after the Global Financial Crisis response to it. In this paper, I argue is not new phenomenon; always been part financial system 1980s, arose from need get around various lending restrictions imposed by central government banks. also emphasize there are two types activities, those initiated banks local governments or state-owned enterprises. provide evidence suggesting prior 1996 helped directing credits more productive non-state sector were efficiency enhancing. years, however, find loans positive effect real estate investments only, their effects private firms outside negative.