Read the article about China and bank bailouts. You do not need to address all of the following but here are some things to think about. What is the moral hazard issue being described in the article about Chinese banks? Do you think there are any adverse selection issues as well? Why or why not? The article mentions that there may be more mergers and acquisitions involving smaller banks in China. What are the pros and cons of this for the banking system in China? The article also mentions shadow financing (shadow banking) as an issue. Give your opinion, does shadow banking help or harm the Chinese banking system and the overall Chinese economy?
Your response must be 300 to 500 words.