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Goodbye (Chinese) shadow banking, hello market-based finance

Gabor, Daniela



Shadow banking in developing and emerging countries (DECs) oscillates between two semantic poles. One definition is typically deployed by scholars for the narrow analysis of non-bank financial intermediation as viable alternative to banking. The other, more recent, circulates in the policy world to capture a new agenda of engineering (securities) market-based finance. The second, the paper argues, is the essential but neglected aspect of DECs shadow banking. The ‘shadow banking into market-based finance’ narrative reaffirms the celebratory tone of the financial globalization cum liberalization thesis dominant before the global financial crisis. It seeks to depoliticize contentious debates about capital flows and the constraints that globalized finance poses to development, instead asking DECs to abandon capital controls, encourage portfolio flows, relax the regulatory grip on shadow funding markets and tap into the growing global demand for securities that marks the new age of asset management.

Journal Article Type Article
Journal Development and Change
Print ISSN 0012-155X
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 49
Issue 2
Pages 394-419
Institution Citation Gabor, D. (in press). Goodbye (Chinese) shadow banking, hello market-based finance. Development and Change, 49(2), 394-419.
Keywords China, shadow banking, securities markets, collateral, wholesale funding, local currency markets, capital controls
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Additional Information Additional Information : This is the peer reviewed version of the following article: [Gabor, D. (2017) Goodbye (Chinese) shadow banking, hello market-based finance. Development and Change. ISSN 0012-155X], which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.