- China had a credit crisis in 1999 and the early
2000s, but at that point its banks had less international
business. A credit crisis now would heavily impact the global
- Aside from shadow banking, moral hazard is an
issue for Chinese banks. Many executives are not held
accountable for bad loans on the banks’
- The asset management companies that bought
state-owned banks’ bad loans at face value
during the last credit crisis may be utilised
- But these asset management companies now have
foreign investors, which would make it more difficult for the
Chinese government to resort to the same restructuring
methods as in the past.
China’s June credit crunch highlighted
increasing risks in its banking system. Although many believe
that the government would support its largest banks, there is
increasing debate about what would happen if a credit crisis
were to occur.
A poll at...