Study reveals how China's monetary policy fuels shadow banking and bank risk

Shanghai Jiao Tong University Journal Center

FacebookXLinkedInWeChatBlueskyMessageWhatsAppEmail

New research employing advanced machine learning techniques reveals that China's collateral monetary policy has significantly stimulated shadow banking growth while increasing bank risks. The study finds this policy creates liquidity distribution distortions, with non-primary banks being particularly vulnerable. Importantly, the 2018 New Asset Management Regulation effectively mitigated these effects, demonstrating the value of targeted regulatory interventions.

Background and Motivation

Over the past decade, China's shadow banking system has experienced substantial growth alongside the implementation of collateral monetary policy. However, the intricate relationships between monetary policy instruments, shadow banking activities, and bank risk exposures remain inadequately understood. This research addresses this critical gap by investigating how collateral requirements distort liquidity allocation and subsequently impact financial stability.

 

Methodology and Scope

The study employs innovative SHAP-Bayesian-XGBoost machine learning methods to analyse the complex interrelationships between collateral monetary policy, shadow banking, and bank risks. By combining the predictive power of XGBoost with SHAP's explanatory capabilities, the research effectively uncovers the "black box" of how monetary policy transmission mechanisms influence shadow banking dynamics and risk accumulation within China's banking sector.

 

Key Findings and Contributions

The analysis reveals four key insights: collateral monetary policy stimulates shadow banking growth through liquidity distribution distortions; this stimulation subsequently increases bank risks; non-primary banks demonstrate heightened sensitivity to these policy effects; and the 2018 NAM Regulation successfully mitigated the policy's stimulative impact on shadow banking and associated risks. The research makes a significant contribution to understanding monetary policy transmission in emerging financial systems.

 

Why It Matters

These findings illuminate the unintended consequences of collateral-based monetary policy frameworks in developing financial markets. The research demonstrates how well-intentioned policy tools can create systemic distortions, while also showing that carefully designed regulations can effectively counteract these adverse effects, offering valuable lessons for global policymakers facing similar challenges.

 

Practical Applications

• Central banks should consider the shadow banking implications when designing collateral frameworks.
• Regulators can implement targeted measures similar to the NAM Regulation to curb policy-driven risk accumulation.
• Financial institutions, particularly non-primary banks, should enhance risk monitoring of shadow banking exposures.
• Policy makers should account for institutional heterogeneity when designing macroprudential measures.

 

Discover high-quality academic insights in finance from this article published in China Finance Review International. Click the DOI below to read the full-text original!

---

Journal

China Finance Review International

DOI

10.1108/CFRI-07-2024-0423 

Method of Research

News article

Article Title

Collateral monetary policy, shadow banking and bank risk evidence from China

FOREVER CHEMICALS

PFAS levels in mothers’ blood associated with children’s brain structure and function

University of Turku

FacebookXLinkedInWeChatBlueskyMessageWhatsAppEmail

Researchers from the University of Turku and Turku University Hospital, Finland, and Örebro University, Sweden, have discovered that the levels of PFAS in mothers’ blood during pregnancy is associated with their children’s brain structure and function.

In recent years, researchers have found associations between the levels of per- and polyfluoroalkyl substances (PFAS) in mothers’ blood during pregnancy, and their children’s neurodevelopmental outcomes. A recent study led by the University of Turku, Finland, expands on this by demonstrating that maternal PFAS predict their children’s brain structural and functional outcomes.

PFAS are man-made chemicals used in manufacturing products resistant to water, oil, temperature, or electrical conductivity, such as cooking utensils, clothes, furniture, food packaging, flooring, dental floss, and firefighting foams. Similar to plastics, they are non-biodegradable, and have been nicknamed “forever chemicals” for this reason. They are now found in all ecosystems on earth, and their presence in the soil is estimated to last for over 1,000 years.

“Humans consume PFAS from drinking water, food, or in some cases exposure through occupation. They are ubiquitous in our blood, and our bodies do not break them down,” says Senior Researcher Aaron Barron from the University of Turku, the lead author of the study.

Over the last decade, accumulating research has implicated blood PFAS levels in adverse health outcomes, especially hormone biosynthesis, metabolism, and immune system function. For this reason, PFAS have begun to attract a considerable amount of public, political, and academic interest, and are now being increasingly regulated in manufacturing and water supplies.

Different PFAS were associated with different brain regions

The new study was set within the FinnBrain Birth Cohort Study, a longitudinal birth cohort established at the University of Turku in 2011. Some of the mothers donated a blood sample during pregnancy, and their blood PFAS levels were measured by mass spectrometry at Örebro University in Sweden. Their children came back for a follow-up visit at 5 years old, and they underwent multimodal magnetic resonance brain imaging at Turku University Hospital. The final analysis included 51 mother–child pairs.

The researchers found that maternal PFAS were linearly associated with many aspects of their children’s brain structure. The three main brain regions involved were the corpus callosum, the brain’s largest white matter tract; the surface area and volume of the posterior grey matter volume, in the occipital lobe; and the hypothalamus, which regulates our body’s homeostasis and endocrine function. None of the associations were any different in boys and girls.

Additionally, some PFAS were associated not only with brain structure, but also brain functional connectivity based on functional MRI scans.

“We were able to measure seven different PFAS in this study, and found that individual compounds had specific associations with offspring brain structure, and in some cases two different PFAS had opposite relationships with the same brain region,” explains Professor Tuulia Hyötyläinen from Örebro University.

The PFAS could be divided into two groups based on their chemical structure – whether they contain a carboxylic acid or a sulphonic acid functional group. In most cases, except for in the hypothalamus, the carboxylate-containing PFAS were the ones that were more strongly associated with brain outcomes in children.

“At the moment, it is unclear whether PFAS are directly affecting brain development, although it’s known that they pass the placenta and the blood-brain barrier to accumulate in the brain, and can disturb developing brain cells. It’s also unclear whether these associations are harmful, beneficial, or neutral, and future studies will be needed to determine the functional implications of our findings,” explains Professor Hasse Karlsson from the University of Turku.

---

Journal

The Lancet Planetary Health

DOI

10.1016/j.lanplh.2025.10130 

Subject of Research

People

Article Title

Prenatal exposure to perfluoroalkyl substances predicts multimodal brain structural and functional outcomes in children aged 5 years: a birth cohort study

Article Publication Date

10-Oct-2025

 

Study reveals crowberry expansion and bilberry decline in Arctic tundra

University of Oulu, Finland

FacebookXLinkedInWeChatBlueskyMessageWhatsAppEmail

 

image: 

Crowberry is taking over the fells, where it has conquered areas covered by bilberry and heather vegetation types, as well as open, wind-swept areas. These changes are affecting the sensitive ecosystems of the fells. Photo: Tuija Maliniemi, University of Oulu

view more 

Credit: Photo: Tuija Maliniemi, University of Oulu

Researchers at the University of Oulu, Finland have observed significant vegetation changes in the treeless heath and tundra regions of northern Finland and Norway over recent decades, marked by the expansion of crowberry (Empetrum nigrum) and the decline of bilberry (Vaccinium myrtillus).

A new study indicates that the primary vegetation types in these areas—bilberry, crowberry, dwarf birch, and heather -dominated tundra—are becoming increasingly homogenized. This shift is particularly evident in bilberry-dominated landscapes, where crowberry proliferation coincides with bilberry decline. While bilberry remains a dominant species, its reduction could impact local ecosystems and alter the visual landscape, especially during autumn foliage.

The research, covering areas from Riisitunturi in northern Finland to Finnmark in Norway, utilized long-term data sets, a rarity in vegetation studies that often focus on shorter time frames and smaller regions. "Over the past decade, we've re-surveyed tundra heathlands initially mapped by Matti Haapasaari in the 1960s and 1970s. Such meticulously collected historical data are invaluable for detecting long-term vegetation changes. We plan to continue monitoring these areas in the future," says Academy Research Fellow Tuija Maliniemi.

The greening of the Arctic region also affects Lapland

Arctic regions are experiencing rapid warming, leading to increased greening and shrub expansion. However, in Finnish Lapland and northern Norway, this trend is decelerated by extensive reindeer grazing, which suppresses the growth of mountain birch and other taller shrubs. Consequently, the greening manifests as the spread of dwarf shrubs, notably crowberry.

The decline of bilberry, which is not expanding into new areas, raises concerns among researchers. "The reasons behind bilberry's decline have not been extensively studied. The unique and locally variable nature of tundra ecosystems suggests multiple factors, such as changes in snow conditions, the proliferation of evergreen plants, and reindeer grazing, may be contributing," notes Doctoral Researcher Petteri Kiilunen from the University of Oulu.

The study Long-term homogenization of Fennoscandian heathland and tundra vegetation is connected to the expansion of an allelopathic dwarf shrub was published in the Ecography scientific journal on October 10th, 2025.

Learn more

• Climate change and forest management can threaten blueberry microbes – differences between northern and southern blueberries 
• Researchers discuss the blueberry situation in a video
• Reindeer grazing can mitigate the impacts of winter climate change on forest carbon release
• Physical Geography Research Group at the University of Oulu

---

DOI

10.1002/ecog.07921 

Article Title

Long-term homogenization of Fennoscandian heathland and tundra vegetation is connected to the expansion of an allelopathic dwarf shrub

Article Publication Date

10-Oct-2025

Instagram photos help scientists track invasive plant flowering patterns

Invasive succulent that smothers native plants shows extended flowering in new territories, where it can dominate coastlines

University of Galway

FacebookXLinkedInWeChatBlueskyMessageWhatsAppEmail

 

image: 

Carpobrotus invasion at Duna do Caldeirão, Vila Praia de Âncora, Portugal. Credit: Jonatan Rodríguez, University of Santiago de Compostela.

view more 

Credit: Credit: Jonatan Rodríguez, University of Santiago de Compostela.

That vibrant carpet of pink and yellow flowers blanketing Mediterranean cliffs might look beautiful in holiday photos on a social media feed. But scientists have discovered these same Instagram snapshots are revealing how one of the world's most destructive coastal plants is taking over new environments by extending its flowering season and threatening native biodiversity.

 

An international team of researchers analysed more than 1,700 photographs from social media and citizen science platforms to track Carpobrotus species - commonly known as ice plants or sour fig – across South Africa, Argentina, New Zealand, Portugal, Spain and the US.

 

These fleshy evergeen succulent plants are native to South Africa but now smother coastal ecosystems from California to the Mediterranean and transform ecosystems.

 

A single Carpobrotus plant can cover up to 50m², suffocating everything beneath it. They change soil chemistry and monopolise pollinators with their showy flowers, disrupting local ecosystems.

 

The findings have been published in Ecological Solutions and Evidence.

 

They are the result of a global study conducted by University of Galway, Institute of Botany of the Czech Academy of Sciences, University of Santiago de Compostela in Spain, Experimental Station of Arid Zones in Spain, Charles University in the Czech Republic, Macquarie University in Sydney, Stellenbosch University in South Africa, and Penn State University.

 

            Dr Susan Canavan, lead author and Honorary Researcher with the College of Science and Engineering at University of Galway, said: "We realised thousands of people were unknowingly documenting these invasions in the background of their beach selfies and cliff-top sunset photos. This gave us observers across the globe, from California's Big Sur to New Zealand's coastlines to Portugal's tourist beaches.”

 

For the research team, California's tourist hotspots provided nearly three times more usable photos than other regions, while remote locations in South Africa and the Azores relied entirely on dedicated naturalist platforms like iNaturalist.

 

The team discovered that the Carpobrotus populations flower longer than native ones, potentially producing more seeds and increasing their spread. In their native South Africa, the plants show a short, concentrated flowering peak but in invaded regions, they bloom across extended periods. This reproductive advantage may help to explain their invasive success.

 

They also found that local environmental conditions override genetic differences in determining flowering timing. The plants adapt to bloom during the local spring season, such as October in New Zealand and May-June in California and Europe, rather than maintaining the flowering patterns from their native range.

 

For coastal managers battling these invaders, the findings offer practical guidance - by revealing peak flowering times in the invaded regions, the research will help them to time removal efforts to prevent seed production.

 

            Dr Canavan added: "Tourist destinations were goldmines of data. Every scenic overlook with Carpobrotus had hundreds of Instagram posts. But this also showed us the bias in social media data. Remote invaded areas remain invisible without citizen scientists actively documenting them.

“The study also demonstrates how the digital age is transforming ecological research. What began as vacation photos and nature observations has become a powerful tool for tracking biological invasions.”

 

            Dr Ana Novoa, co-author and project lead from the Institute of Botany of the Czech Academy of Sciences, said: "These plants are notoriously difficult to control because they spread both by seed and by fragments. Even a small piece can regrow into a new colony. Knowing exactly when they flower in each region means we can strike when they're most vulnerable, before they produce the thousands of seeds that ensure next subsequent invasions."

  

Open flower and a bud of Carpobrotus in the Tower of Hércules Natural Reserve, A Coruña, Spain. 

Carpobrotus plants competing for space and pollinators with the native gorse Ulex europaeus in the Tower of Hércules Natural Reserve, A Coruña, Spain.

Credit

Jonatan Rodríguez, University of Santiago de Compostela.

The full study, published in Ecological Solutions and Evidence, is available at https://doi.org/10.1002/2688-8319.70122.

 

Ends

---

Journal

Ecological Solutions and Evidence

DOI

10.1002/2688-8319.70122 

Method of Research

Observational study

Subject of Research

Not applicable

Article Title

iEcology reveals the importance of geography and genetic makeup in the flowering phenology of invasive Carpobrotus taxa

Article Publication Date

13-Oct-2025