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We are grateful to Yang Cong, Yejing Zhou, Xueguan Lin, Jie Tang, Moran Wu, Hong Kou, and Ying Fan for their insightful comments. Thanks to Sharlin George for the technical support. Remaining errors and omissions are the authors’ responsibility.
LGFPs are corporate entities set up by local governments to support project financing, particularly in infrastructure and real estate. See details in Lu and Sun (IMF, 2013).
The rapid expansion of margin financing is associated with the weak implementation of the strict rules on margin financing requirements. For instance, the minimum amount to open an account was required to be no less than 500,000 yuan with a period of 18 months. However, in 2014, many securities companies opened accounts with only 50,000 yuan and a period of less than six months.
Regulation Q was part 217 of the United States Code of Federal Regulations. From 1933 until 2011 it prohibited banks from paying interest on demand deposits in accordance with Section 11 of the Glass–Steagall Act (formally the Banking Act of 1933). From 1933 until 1986 it also imposed maximum rates of interest on various other types of bank deposits, such as savings accounts and NOW accounts
China launched the Deposit Insurance Act in May 2015, aimed at better disciplining its lenders and their customers. Under the plan, up to 500,000 yuan in deposits made by businesses and individuals per bank will be insured. More than 99% of depositors would be covered.
In the US, the Financial Stability Oversight Council was established in 2010 right after the Subprime Crisis, which brings together the Treasury, Federal Reserve Board, FDIC,SEC, OCC and other major regulatory authorizes. The mandate of FSOC is to identify the risks to the financial stability from both financial and non-financial organizations and respond to emerging threats to the stability of the US financial system.