| This article collects entrusted loans data issued by listed companies within 2004-2013. This sample data is for the study. From the perspective of the shadow banking,to analysis the operational characteristics of entrusted loans, risk control and regulatory arbitrage. The study found that the operational characteristics of entrusted loans are as follows:(1) From the maturities of funding sources, the entrusted loan funds had 98.34 percent of the funds from its own funds, a small amount from the debt, but the money comes mainly from surplus production and cash flow from operating activities, so its basically difficult problems arise from maturity mismatches, and less related to leverage.(2) From the perspective of financial regulation avoidance, entrusted loans are mainly to circumvent the government’s industrial policies and subject to bank credit interest rate controls to bypass both financial regulation, access to relevant interests.(3) Although the shadow banking the express procyclical, but whether it is from the perspective of financial risk or support economic development entities to examine dimensions, entrusted loans showed a significant inverse cyclical nature with incremental GDP, bank credit,but increased during the economic crunch, expressing counter-cyclical. Inter-enterprise credit risk control mechanisms entrusted mainly in information superiority and control advantages entrusted loans. Information superiority mainly for entrusted loans are mostly between associated enterprises issuing equity, and has geographical advantages, among non-equity loans to affiliated enterprises commissioned mainly through collateral mechanisms to control risks. Overall, as a tool for financial innovation, trust fund loans are a useful complement to our bank-dominated financial system. But in order to avoid hollowing SMEs and high default rates, it is necessary to implement reasonable supervisory entrusted loans to prevent their systemic risk. |
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