Running head: CHINA’S SHADOW BANKING SYSTEM �1 " " " " " " " China’s Shadow Banking Systems Hind Z. Aljohani Marymount University " " " " " " Sharron Terrell Sharron Terrell: Good application of APA to page formatting. In general more citations are needed. Running head: CHINA’S SHADOW BANKING SYSTEM �2 Introduction: Shadow banking systems act as financial intermediaries between large borrowers and lenders. Even though shadow banking systems are involved in the creation of credit, they are subjected to lesser governmental regulatory oversight compared to commercial banks (Dang et al., 2015). Entities that constitute shadow banking systems include hedge funds, mutual funds, and structured investment vehicle. Entities that comprise the shadow banking systems earn their revenues through fees they charge and interest rate spreads. Shadow banking systems in China are a unique case in that they are comprised mostly of state-controlled commercial banks. Shadow banking has had a positive effect on China’s economic growth, and according to Moody’s Investor Service, accounted for nearly 65% of China’s Gross Domestic Product in 2014. On a global level, shadow banking accounts for almost a quarter of the money transferred between lenders and borrowers. In an emerging market such as China, shadow banking provides retail investors a place to store their funds and loans to borrowers smaller than what the official state policy permits. The Chinese shadow banking system has its origin in regulatory arbitrage constituted by interest rate control measures and limits on market-based finance of a quantitative nature. Shadow banking in China circumvents rules imposed on loan-to-deposit as a form of off- balance sheet bank lending system. " " " Sharron Terrell Sharron Terrell: Now tell the reader the focus of your paper. For example, "This paper focuses on shadow banking in China. Then list the subtopics you intend discussing. Use the subtopic list to create subtitles to organize your paper. Make certain the definition subsection appears immediately after the introduction section. Sharron Terrell Sharron Terrell: Put this in a subsection. Sharron Terrell Sharron Terrell: Discuss shadow banking in China...you haven't written enough about shadow banking in China. Sharron Terrell Sharron Terrell: Is the full page your introduction? If so, before the page ends, tell the read the focus of your paper. Running head: CHINA’S SHADOW BANKING SYSTEM �3 Statistics behind China’s Shadow Banking System: • According to the Financial Stability Board, China’s shadow banking was estimated to be worth over 3 trillion dollars by the end of 2014. • The shadow banking system in China was up from 42% in 2012 to 51% in 2014 of China's gross domestic product. In 2014 it was approximately worth over 5 trillion dollars (Bottelier, 2015). ...

1. Running head: CHINA’S SHADOW BANKING SYSTEM �1
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China’s Shadow Banking Systems
Hind Z. Aljohani
Marymount University
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Sharron Terrell
Sharron Terrell: Good application of APA to page formatting.
In general more citations are needed.
Running head: CHINA’S SHADOW BANKING SYSTEM �2

2. Introduction:
Shadow banking systems act as financial intermediaries between
large borrowers and
lenders. Even though shadow banking systems are involved in
the creation of credit, they are
subjected to lesser governmental regulatory oversight compared
to commercial banks (Dang et
al., 2015). Entities that constitute shadow banking systems
include hedge funds, mutual funds,
and structured investment vehicle. Entities that comprise the
shadow banking systems earn their
revenues through fees they charge and interest rate spreads.
Shadow banking systems in China
are a unique case in that they are comprised mostly of state-
controlled commercial banks.
Shadow banking has had a positive effect on China’s economic
growth, and according to
Moody’s Investor Service, accounted for nearly 65% of China’s
Gross Domestic Product in
2014.
On a global level, shadow banking accounts for almost a quarter
of the money transferred
between lenders and borrowers. In an emerging market such as

3. China, shadow banking provides
retail investors a place to store their funds and loans to
borrowers smaller than what the official
state policy permits. The Chinese shadow banking system has
its origin in regulatory arbitrage
constituted by interest rate control measures and limits on
market-based finance of a quantitative
nature. Shadow banking in China circumvents rules imposed on
loan-to-deposit as a form of off-
balance sheet bank lending system.
"
"
"
Sharron Terrell
Sharron Terrell: Now tell the reader the focus of your paper.
For example, "This paper focuses on shadow banking in China.
Then list the subtopics you intend discussing.
Use the subtopic list to create subtitles to organize your paper.
Make certain the definition subsection appears immediately
after the introduction section.
Sharron Terrell
Sharron Terrell: Put this in a subsection.
Sharron Terrell
Sharron Terrell: Discuss shadow banking in China...you haven't
written enough about shadow banking in China.

4. Sharron Terrell
Sharron Terrell: Is the full page your introduction? If so, before
the page ends, tell the read the focus of your paper.
Running head: CHINA’S SHADOW BANKING SYSTEM �3
Statistics behind China’s Shadow Banking System:
• According to the Financial Stability Board, China’s shadow
banking was estimated to be
worth over 3 trillion dollars by the end of 2014.
• The shadow banking system in China was up from 42% in
2012 to 51% in 2014 of
China's gross domestic product. In 2014 it was approximately
worth over 5 trillion dollars
(Bottelier, 2015).
United States of America and China’s Shadow Banking
Systems:
China’s shadow banking system has enabled their economy to
grow at a very fast rate of
approximately 10% per annum and has reached that of first
world nations, for example, the
United States of America (Dang et al., 2015). Securitization
structures in Unites States’ financial
sector and trust loans in China both face strict regulatory

5. policies. In China, the shadow banking
systems rely on the country’s banks to facilitate their functions,
while in the United States it
depends on redistribution of risk, credit intermediation and
pricing systems. The main difference
though occurs in the two systems interpretation of assets that
the respective financial systems
consider safe. China’s shadow banking system is relatively
simpler compared to the United
States’.
Drivers of China’s Shadow Banking Systems:
Investors in China are continuously discouraged by the low-
interest rates offered by
banks and therefore sort for an alternative in shadow banking.
The interest rates provided by
Chinese commercial banks do not match the country’s inflation
rate, and therefore real estate,
and equity markets, became weaker investments (Luo, 2016).
Commercial banks in China at the
Sharron Terrell
Sharron Terrell: No bullets; write in paragraph form.
Sharron Terrell
Sharron Terrell: Good idea to make statistics a subsection.

6. Sharron Terrell
Sharron Terrell: This subsection should follow the "Drivers of
China's..." subsection.
Sharron Terrell
Sharron Terrell: Placing citations at the end of sentences (or
paragraphs) is awkward because then it's difficult to tell who is
speaking. For example, it's better to write, "According to Luo
(2016), interest rates provided..."
Running head: CHINA’S SHADOW BANKING SYSTEM �4
same time were being discouraged from lending money to
smaller entities. Liquidity restraints
placed on commercial banks by the Chinese government also
restricted banks to give more than
75% of their net deposits. Chinese banks were left with no other
choice but to develop vehicles,
which would allow them to lend money to whatever entities
irrespective of their size, through the
use of new product packages.
Wealth management products became an intricate part of the
shadow banking system.
Wealth management products allow investors to pay up short-
term money against larger loans,
and at times more than one loan. In China, wealth management
products have several categories,

7. and some structures in them are different from the bank-created
sector, in that they often lend
money to lower profit sectors of China’s economy. Examples of
such sectors in China’s economy
with reduced volatility include mining and real-estate sectors.
In essence, wealth management
products are just another way of labeling bank deposits, without
all the regulations that
accompany them. Wealth management products in China are
worth over 15 trillion dollars and
represent over 25% of China’s gross domestic product (Sheng &
Ng, 2016).
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Sharron Terrell
Sharron Terrell: Awkwardly placed citation.
Running head: CHINA’S SHADOW BANKING SYSTEM �5
Reference

8. Boone, P., & Johnson, S. (2014). China's Shadow Banking
Malaise. Retrieved September 28,
2016, from
http://economix.blogs.nytimes.com/2014/03/27/chinas-shadow-
banking-
malaise/?_r=1
Bottelier, P. (2015, June 17). Shadow Banking in China.
Retrieved September 28, https://
www.homeworkmarket.com/sites/default/files/ax/16/09/25/04/sh
adow_banking.pdf
Causes and consequences of China's shadow banking | VOX,
CEPR's Policy Portal. Retrieved
September 28, 2016, from http://voxeu.org/article/causes-and-
consequences-china-s-
shadow-banking
China's Shadow Banking Evolves to Dodge Crackdown.
Retrieved September 28, 2016, from
http://www.bloomberg.com/news/articles/2016-02-24/china-
shadow-banking-dodges-
crackdown-as-funds-take-trusts-role
Dang, T. V., Wang, H., & Yao, A. (2015, December). Shadow
Banking Modes: The Chinese
versus US System. Retrieved September 28, 2016,
https://www.homeworkmarket.com/

9. sites/default/files/ax/16/09/25/04/paper_banking.pdf
He, D. (2016). Financial Security in China: Situation Analysis
and System Design.
Hsu, S. (2015). The Rise and Fall of Shadow Banking in China.
Retrieved September 28, 2016,
from http://thediplomat.com/2015/11/the-rise-and-fall-of-
shadow-banking-in-china/
Jiang, W. (n.d.). The Future of Shadow Banking in China.
Retrieved September 28, 2016, https://
www.homeworkmarket.com/sites/default/files/ax/16/09/25/04/
shadow_banking_in_china_chazen_institute.pdf
http://economix.blogs.nytimes.com/2014/03/27/chinas-shadow-
banking-malaise/?_r=1
https://www.homeworkmarket.com/sites/default/files/ax/16/09/2
5/04/shadow_banking.pdf
http://voxeu.org/article/causes-and-consequences-china-s-
shadow-banking
http://www.bloomberg.com/news/articles/2016-02-24/china-
shadow-banking-dodges-crackdown-as-funds-take-trusts-role
https://www.homeworkmarket.com/sites/default/files/ax/16/09/2
5/04/paper_banking.pdf
http://thediplomat.com/2015/11/the-rise-and-fall-of-shadow-
banking-in-china/
https://www.homeworkmarket.com/sites/default/files/ax/16/09/2
5/04/shadow_banking_in_china_chazen_institute.pdf
Running head: CHINA’S SHADOW BANKING SYSTEM �6

10. Liansheng, Z. (2015, March). The Shadow Banking System of
China and International
Regulatory Cooperation. Retrieved September 28, 2016, from
https://
www.homeworkmarket.com/sites/default/files/ax/16/09/25/04/
new_thinking_g20_no6.pdf
Lok, C. B. (2016). Chinese Shadow Banking:
Solution
or Problem? Retrieved September 28,
2016, from
https://blogs.cfainstitute.org/marketintegrity/2015/06/02/chines
e-shadow-
banking-solution-or-problem/
Luo, D. (2016). The development of the Chinese financial
system and reform of Chinese
commercial banks.

11. Shen, W. (2016). Shadow banking in China: Risk, regulation
and policy.
Sheng, A., & Ng, C. S. (2016). Shadow banking in China: An
opportunity for financial reform.
Zhang, J., Cheng, J., & Griffith, G. (2014). Inside China's
shadow banking: The next subprime
crisis. Singapore: Enrich Professional Publishing.
https://www.homeworkmarket.com/sites/default/files/ax/16/09/2
5/04/new_thinking_g20_no6.pdf
https://blogs.cfainstitute.org/marketintegrity/2015/06/02/chines
e-shadow-banking-solution-or-problem/
Eco 332 Term Paper grading rubric2
Letter Grade
A to A-
B+ to B-
C+ to C-
D+ to D-
F
Points

12. 12 – 10.8
10.7 – 9.6
9.5 – 8.4
8.3 – 7.2
0
Premise/thesis
Well-developed introduction. Sufficient background is included
to direct the reader and the central thesis is clearly
communicated, worth developing; limited enough to manage.
Introduces the topic. Sufficient background and clearly states a
thesis/central idea, but may have minor lapses in development.
Introduces the topic in general terms. Insufficient background;
unclear thesis yet may be inferred.
Inadequate introduction. No background or does not have a
clear idea or does not respond appropriately to the assignment.
Does not introduce the paper or provide a thesis.
Points
45 – 40.5
40.1 – 36
35.5 – 31.5
31.1 – 27
26.6 - 0

13. Body
Excellent response to the assignment.
· Clearly, logically and effectively presents information learned
about the topic.
· Uses appropriate terminology and defines terms where
necessary.
· Important and relevant similarities and differences between
systems are delineated clearly and discussed.
· Includes relevant and sufficient statistics on pertinent
measures of system differences.
· Discussion tells an interesting and informative story about the
system. Initial and emerging trends in the system are
addressed.
Very good response to the assignment.
· Information learned is presented in a relatively logical and
informative manner.
· Mostly uses appropriate terminology and defines most
important terms.
· Important and relevant similarities and differences are
identified, most discussed.
· Reports relevant stats on pertinent differences.
· Discussion is interesting and informative about initial
characteristics and emerging trends.
Good response to the assignment.
· Some aspects need more development.

14. · Information learned is presented yet disorganized and unclear.
· Inconsistent use of terminology or omitted definitions.
· Identified similarities and differences yet did not or
incompletely discussed.
· Tells an incomplete story about the system; omits a discussion
of initial and emerging trends.
Weak response to the assignment.
· Unclear presentation of information learned.
· Used bullet-format or omitted discussion of similarities and
differences.
· Tells a sketchy story about the system.
· No evidence of synthesis.
Poor response.
· Unclear what the topic is or what was learned from the topic.
· Or, did not submit the assignment.

15. Points
12 – 10.8
10.7 – 9.6
9.5 – 8.4
8.3 – 7.2
0
Organization & coherence
Uses a logical structure appropriate to paper’s subject, purpose,
audience, thesis, and disciplinary field. Sophisticated
transitional sentences often develop one idea from the previous
one or identify their logical relations. It guides the reader
through the chain of reasoning or progression of ideas.
Concludes the paper in a paragraph.
Shows a logical progression of ideas and uses fairly
sophisticated transitional devices; e.g., may move from least to

16. more important idea. Some logical links may be faulty, but
each paragraph clearly relates to paper’s central idea. Concludes
the paper in a paragraph
May list ideas or arrange them randomly rather than using any
evident logical structure. May use transitions, but they are
likely to sequential (first, second, third) rather than logic-based.
While each paragraph may relate to central idea, logic is not
always clear. Paragraphs have topic sentences but may be
overly general, and arrangement of sentences within paragraphs
may lack coherence.
May have random organization, lacking internal paragraph
coherence and using few or inappropriate transitions.
Paragraphs may lack topic sentences or main ideas, or may be
too general or too specific to be effective. Paragraphs may not
all relate to paper’s thesis.
No appreciable organization; lacks transitions and coherence.
Points
10 -9
8.9 – 8.0
7.9 – 7.0
6.9 – 6.0
0
Support
References include two academic sources and six other credible
sources.

17. References include two academic sources and 4 other credible
sources
References include one academic source and six other credible
References do not include any academic sources.
No references included.
Points
11 – 9.9
9.8 – 8.8
8.7 – 7.7
7.6 – 6.6
6.6 - 0
Formatting and Grammar
Follows all APA style requirements for the paper.
Subtitles are used to organize the paper. Entirely free of
spelling, punctuation, and grammatical errors (1-3 minor
errors).
Nearly all APA style requirements are met. Subtitles are used to
organize the paper. Entirely free of spelling errors; minor
grammatical or punctuation errors, 4-5).
Partially applied APA style requirements. Paper is not
subtitled. Entirely free of spelling errors, some punctuation
errors (6-7), syntax and other errors, which are confusing.
APA style is not applied; many spelling, punctuation and/or
grammatical errors (8 or more). Paper is not subtitled;
Unstructured formatted paper.

18. Points
10 -9
8.9 – 8.0
7.9 – 7.0
6.9 – 6.0
0
Length
Meets 1,250 – 1,500 word requirement (excluding title and
references pages).
1,249 – 1,200 words (excluding title and references pages)
1,185 – 1,050 words (excluding title and references pages)
1,035 – 900 words (excluding title and references pages)
Less than 900 words.
(excluding title and references pages)