- China’s shadow banking adapts and grows as rules tighten
- Shadow banking shifts form to aid yield hun
- Shadow Banking Sector Growing Across The Globe
- Keep an Eye Out: The 75 Trillion Dollar Shadow Banking System Is In Danger Of Collapsing
- Small is ugly: Bad loans pile up at China’s small, unlisted banks
Now the demand is no longer coming from companies in need of working capital – but the investor community that needs leverage to increase returns. While bond rates worldwide have fallen sharply, pension funds haven’t lowered their return expectations resulting in widening liabilities.
Their response has been to turn to new techniques that require some form of leverage. That leverage is sourced by hedge fund and asset managers from holders of cash – via brokers acting as middle men – who lend their money out and take financial assets as security. …
To sum that big idea up, the paper is pointing out that much of the world’s spare cash is being channelled towards an increasingly desperate investment community that is borrowing it to amplify its bets, and increase its returns to compensate for low interest rates, so that we as a society can earn enough for retirement.