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The Rise of Chinese Money Market Funds

Author

Listed:
  • Kate McLoughlin

    (Reserve Bank of Australia)

  • Jessica Meredith

    (Reserve Bank of Australia)

Abstract

Money market funds (MMFs) pool funds in an investment vehicle to invest in short-term, highly rated securities. The MMF sector in China has grown rapidly over the past few years and is now the world’s second largest by assets, though it is small compared with China’s domestic bank deposits. This growth has been driven by investors attracted by high yields relative to bank deposits and technological developments that allow Chinese MMFs to offer a convenient cash management service. Chinese MMFs differ from similar products in many other countries: they tend to be more leveraged, and they offer more liquidity and maturity transformation. Nonetheless, recent regulatory reforms to address vulnerabilities have taken a similar direction to reforms globally.

Suggested Citation

  • Kate McLoughlin & Jessica Meredith, 2017. "The Rise of Chinese Money Market Funds," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 75-84, March.
    • Handle: RePEc:rba:rbabul:mar2017-09
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2017/mar/pdf/bu-0317-9-the-rise-of-chinese-money-market-funds.pdf
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    Citations

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    Cited by:

    1. Adrian, Tobias & Breuer, Peter & Ashcraft, Adam & Cetorelli, Nicola, 2018. "A Review of Shadow Banking," CEPR Discussion Papers 13363, C.E.P.R. Discussion Papers.
    2. Zheren Wang & Shenglin Ben, 2022. "Effect of consumers’ online shopping on their investment in money market funds on ecommerce platforms," Information Systems and e-Business Management, Springer, vol. 20(2), pages 325-346, June.
    3. Torsten Ehlers & Steven Kong & Feng Zhu, 2018. "Mapping shadow banking in China: structure and dynamics," BIS Working Papers 701, Bank for International Settlements.
    4. Cai, Yu & Wang, Qing, 2022. "Money funds manage returns," Pacific-Basin Finance Journal, Elsevier, vol. 71(C).
    5. Niu, Geng & Zhou, Yang & Gan, Hongwu, 2020. "Financial literacy and retirement preparation in China," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    6. Xu, Xiaoqing Eleanor, 2021. "Dissecting the segmentation of China's repo markets," Pacific-Basin Finance Journal, Elsevier, vol. 70(C).

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