NBFI, Inc.

China’s central bank is attempting a difficult feat: squeezing speculative components of China’s financial system without impacting the broader economy. The impact of the PBOC’s actions will depend upon what types of borrowers non-bank financial institutions (NBFIs) are funding. An aggregate analysis of 88.6 trillion yuan in NBFIs’ assets shows that local governments and SOEs, and indirectly, the property sector, are key recipients of credit from these firms. Tightening steps are more likely to result in liquidations of equities and fixed income assets, a process that has been unfolding within Chinese markets in recent days.

Posted August 1, 2017
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