No More Bailouts? China's New Approach to Bank Stress

China’s legions of regional banks are feeling the strain. The country’s two-year crackdown on risky financing and the trade war with the U.S. have slowed economic growth, triggering debt defaults that are exposing them as the weakest link in the credit chain, Bloomberg News reported. Several lenders have fallen into deep trouble this year, with others -- perhaps many -- expected to follow. What’s different is that China seems to have thrown out the old playbook of injecting state funds into struggling lenders to keep them alive. If that proves to be the case, it would represent another shift for the country toward more market-oriented practices. So banks are being allowed to fail? Not quite. They’re being rescued but investors are having to bear some of the brunt. Read more

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