Issuance of Wealth Management Products and Expected Yields; A Shadow Banking Perspective

Shah, Syed Mehmood Raza and Fu, Qiang and Dawood, Muhammad and Ishfaq, Muhammad (2020): Issuance of Wealth Management Products and Expected Yields; A Shadow Banking Perspective. Published in: International Journal of Management (IJM) , Vol. 11, No. 11 (13 November 2020): pp. 586-596.

Abstract

In the last decade, shadow banking in China has expanded rapidly, driven predominantly by banking regulations and credit restrictions on specific industries. Wealth management products are considered the largest contributors to the overall shadow banking sector in China. The majority of these products are off the balance sheet and offer much higher yields than conventional deposit rates. This study aims to examine how commercial banks, more specifically small and medium-sized banks (SMBs), utilize wealth management products to offer higher yields on new products. This study comprises the top 30 Chinese banks from the first quarter of 2013 to the last quarter of 2019. A fixed-effects approach was adopted by implementing the panel corrected standard errors (PCSE) and Driscoll and Kraay standard errors (DKSE) models. This study found that for SMBs, the issuance of WMPs has a positive and significant impact on the yields of new products, but there is no such significant relationship exists for large four banks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Wealth Management Products, Shadow Banking, Yields, Regulations, Panel data
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill

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