Accounting For China’s Informal Banking Structure

China’s economic apparatus is complex and sophisticated, with many facets that people, particularly non economists, don’t really understand. One of these obscure facets is the informal banking sector, which has come under close scrutiny in recent years. Informal banking is a huge industry in China, that includes more than 14% of the country’s GDP, amounting to something between 7.1 and 12.14 trillion Chinese dollars.

Informal banking fills a niche in the Chinese financial market underneath dominant national banks, and local government borrowing schemes. According to John L Thornton, in his China Center Paper, Chinese local governments command one-third of outstanding bank loans . Thornton said that state infrastructure projects soak up 30-40% of total Chinese loans.

As the government absorbs so much of the country’s credit, small and independent borrowers are left without financing options. Informal banking structures target this niche. Xia Gang, chair for the Bank of China said that informal lending organisations are “fundamentally a Ponzi scheme.”

Best Interest Rates on Mortgages

When looking for the best deal on home loan interest, it’s always necessary to do a bit of research. A new study of the Australian home loan market has found that the current best option in loans is available through mortgage brokers, reported Property Observer.

The Australian Lenders’ Index is a report that compares the performance of Australia’s major lenders of home loans and their respective interest rates.

Since the advent of the Global Financial Crisis (GFC), one lender has been consistent with interest rate performance. HomeSide is a subsidiary of the National Australia Bank (NAB), and is ranked as number one in position. NAB ranked second, with ANZ coming in at third. They were followed by the Commonwealth Bank, St George (a subsidiary of Westpac) and Westpac.