Chinese shadow banking and how it affects other countries Essay

Chinese shadow banking and how it affects other countries - Essay Example IMF is of the opinion that shadow banking is existent around the globe, and the same practice has both practical and negative implications on the countries that choose to embrace the form of banking. China has been on the frontline to embrace the shadow banking. As seen in the research conducted by Suzuki, the improvement of shadow banking among the Chinese was set to ensure that China’s economy is transformed to an extent that the country would avoid a massive downturn (35). This aspect, as the author indicates, is linked to the fact that China’s shadow banking was linked to direct finance where the investors directly incurred the costs and risks of procuring primary securities supplied by different firms in the capital markets (Suzuki 36). The author continues to accredit the success of China’s shadow banking to the support of the political sphere (Suzuki 38). Through the political good will in China, shadow banking is said to have revolutionized China’s economy to a positive side and even placed China at a better place to compete with other countries on the regional level. The success of shadow banking as Suzuki indicates, has seen its success thanks to governments control on the chief economic resources such as the loans given by the banks (38). From the International Monetary Fund’s research, China has been rated as the fifth in regard to FSB rating (74). Going with these statistics, China has reported growth in terms of GDP with its bank credits expanding with the day. This will indeed have impacts on other countries in terms of trade with other countries such as Malaysia that has recorded an increased household debts as well as Thailand that id recording debts since 2007 (International Monetary Fund 77). From these statistics, it is almost obvious that China’s shadow banking has helped China compete strongly with other partners in the global market and even outdo some of the