Shadow Banking, Financial Risk and Regulation in China and other Developing Countries

Seminar was co-hosted by the Globalization and Finance Project and the Political Economy of Financial Markets Programme (PEFM).

Is the rapid growth of shadow banking placing China and other developing countries at increased risk of financial crisis? Shadow banking is growing rapidly in a number of emerging and developing countries, including China, where lending by non-bank institutions is now thought to be as large as lending by banks. The shadow banking sector in developing economies is typically weakly regulated, and the growth of the sector poses risks to financial stability. Yet, some argue that shadow banking is an important channel of alternative funding to emerging and developing economies, particularly in the face of significant retrenchment by European banks. In this seminar, Professor Schwartz will examine the impact of shadow banking on financial market and systemic risk in developing countries, and explore whether and, if so how, the sector should be regulated.

• Professor Steven Schwarcz is the Stanley A. Star Professor of Law & Business, Duke University School of Law and Founding Director of Duke’s interdisciplinary Global Capital Markets Center. His areas of research and scholarship include insolvency and bankruptcy law; international finance, capital markets, and systemic risk; and commercial law. Prior to joining the Duke faculty, he was a partner at two leading international law firms, where he represented top banks and other financial institutions in structuring innovative capital market financing transactions, both domestic and international.