What does shadow banking mean?

Although people often use banks in their daily lives, I believe many people are not particularly clear about the specific meaning of shadow banking, so today we will tell you in detail what shadow banking means and how risky it is.

First of all, we need to tell you that, according to the definition of the Financial Stability Board, shadow banking refers to a credit intermediary system that is divorced from the banking supervision system, which may lead to systemic risks and regulatory arbitrage of banks, including the business and activities of various related institutions. So what are the risks of shadow banking? Let's be specific.

1. The systemic risk factors caused by shadow banking mainly include maturity mismatch, liquidity conversion, credit conversion and high leverage.

2. At present, there are not many separate institutions in our country's shadow banking, but more of a function of evading supervision, just like everyone's loan, which does not need to accept any hidden flow of supervision funds. This is very similar to what we call shadow banking. In addition, the most strictly regulated banks, but the bank wealth management products not included in the credit business, are also shadow banks.

3. At present, there are three main forms of shadow banking in China, one is bank wealth management products, the other is non-bank financial loan products, and the third is private lending.

Through the above understanding, we can clearly know that traditional bank wealth management products and risky fund wealth management tools belong to shadow banking, and the risks of these products and tools are very small, so the risks of shadow banking are also very small.