Joe Zhang, ex-deputy head of China investment banking at UBS, talks about his role as a Chinese shadow banker. Since 2011, Zhang has run a microcredit firm in Guangzhou, which provides loans to thousands of small-scale entrepreneurs. He argues that shadow banking has been wrongly demonised despite serving a legitimate customer base and having much lower leverage than banks. The practice has flourished in China due to financial repression. By keeping rates artificially low, authorities have forced savers to search for more lucrative financial products. By favouring state-owned companies, they have forced small enterprises to seek out shadow bankers. (VIEW LINK)
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