GREGORY CHOW

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How interest rate controls created a shadow banking system in China

It is well known that the interest rate commercial banks can pay to depositors is controlled by the government. As of February this year, the rate was only 3 per cent per year, while the consumer price index increased by 3.2 per cent , providing depositors with a negative real return for their deposits.

26 Jul 2013 - 2:35AM

It is well known that the interest rate commercial banks can pay to depositors is controlled by the government. As of February this year, the rate was only 3 per cent per year, while the consumer price index increased by 3.2 per cent , providing depositors with a negative real return for their deposits.

How interest rate controls created a shadow banking system in China