Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190221 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 800
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
China's four-trillion-yuan stimulus package fueled by bank loans in 2009 has led to the rapid growth of shadow banking activities in China after 2012. The local governments in China financed the stimulus plan mainly through bank loans in 2009, and resorted to non-bank debt financing after 2012 given the mounting rollover pressure from bank debt coming due, a manifestation of the stimulusloan- hangover effect. Cross-sectionally, provinces with abnormally greater bank loan growth in 2009 experienced more Municipal Corporate Bonds issuance during 2012-2015, as well as more shadow banking activities including Entrusted loans and Wealth Management Products. We highlight the market forces behind the regulation changes on local government debt post 2012, together with the expedited reform on interest rate liberalization during that period.
Subjects: 
local government financing vehicles
municipal corporate bonds
shadow banking in China
JEL: 
E61
G21
H72
O17
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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