Risk Transfer Measures of Shadow Banks: A Case Study of Lufax
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Risk Transfer Measures of Shadow Banks: A Case Study of Lufax

Zhuolin Xu 1* Jiangyi Zhu 2, Tianyi Zhou 3, Aihua Liu 4
1 Hangzhou Normal University Qianjiang College
2 Xi’an Jiaotong-Liverpool University
3 Chinese University of Hong Kong
4 Finance, Wenzhou Kean University, Wenzhou 325060, China
*Corresponding author: lilan3146@gmail.com
Published on 9 September 2025
Journal Cover
AEMPS Vol.213
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-351-2
ISBN (Online): 978-1-80590-352-9
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Abstract

Lufax’s digital platform lowers barriers to entry for financial services, especially for SMEs and individuals who may be underserved by traditional banks. This contributes to broader financial inclusion, stimulating economic activity by enabling more businesses and individuals to participate in the market. This paper explores the phenomenon of shadow banking in China. Our specific focus is on Lufax, one of the leading companies in the finance sector. Lufax leverages Internet technology to provide financial services to small and medium enterprises (SMEs) and individuals. We offer a detailed case study of Lufax’s business model to provide insights into the complexities of shadow banking in a rapidly evolving financial landscape. Furthermore, we analyze Lufax’s operational risks, methods of risk transfer, its relationships with SMEs, connections with the investors, and the role played by the Ping An Group. The Lufax case illustrates the unique risk management of China’s shadow banking, where technology and ties with Ping An Group have established a comprehensive risk management system to support sustainable growth.

Keywords:

SME financing, Lufax, shadow banking, risk transfer

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Xu,Z.;Zhu,J.;Zhou,T.;Liu,A. (2025). Risk Transfer Measures of Shadow Banks: A Case Study of Lufax. Advances in Economics, Management and Political Sciences,213,76-92.

References

[1]. Allen, F., Gu, X., Qian, J., (2017). The People's Bank of China: History, current operations and future outlook. Unpublished SSRN Working Paper 3018506. https: //doi.org/10.2139/ssrn.3018506

[2]. Allen, F., Qian, J., Gu, X., (2015). China's financial system: Growth and risk, Foundations and Trends in Finance 9(3-4), 197-319. https: //doi.org/10.1561/0500000029

[3]. Acharya, V. V., Qian, J., Su, Y., Yang, Z., (2021). In the shadow of banks: Wealth management products and issuing banks' risks in China. Unpublished working paper, NYU Stern and Fudan University.

[4]. Allen, F., Qian, Y., Tu, G., Yu, F., (2019). Entrusted loans: A close look at China's shadow banking system. Journal of Financial Economics 133(1), 18-41. https: //doi.org/10.1016/j.jfineco.2019.01.006

[5]. Allen, F. , Gu, X. , Li, C. W. , Qian, J. Q. , & Qian, Y. (2023). Implicit guarantees and the rise of shadow banking: the case of trust products. Social Science Electronic Publishing. DOI: 10.2139/ssrn.3924888

[6]. Chen, K., Ren, J., Zha, T., (2018). The nexus of monetary policy and shadow banking in China. American Economic Review 108(12), 3891-3936. https: //doi.org/10.1257/aer.20170133

[7]. Dang, T. V., Liu, L., Wang, H., Yao, A., (2019). Shadow banking modes: The Chinese versus US System. Unpublished working paper, Columbia University. https: //doi.org/10.2139/ssrn.3491955

[8]. Kodres, L. E. (2013). What is shadow banking. Finance and Development, 50(2), 42-43.

[9]. Adrian, T. and A. Ashcraft. (2012). Shadow Banking: A Review of the Literature, Staff Report No. 380. Federal Reserve Bank of New York.

[10]. Nesvetailova, A. (2017). Shadow Banking. Scope, Origins and Theories, New York, Oxon: Routledge.

[11]. Ping An Insurance. (2024). Announcement of Ping An Insurance (Group) Company of China, Limited on the inclusion of Lufthansa Holdings Company Limited into the scope of consolidated statements of income. www.Hkexnews.Hk. Retrieved from https: //doc.irasia.com/listco/cn/pingan/announcement/sca240704b.pdf.

[12]. Dustyn DeSpain, A. V. P., & Pandolfo, J. (2024). New Small Business Lending declines as credit standards continue to tighten. Federal Reserve Bank of Kansas City. Retrieved from https: //www.kansascityfed.org/surveys/small-business-lending-survey/new-small-business-lending-declines-as-credit-standards-continue-to-tighten/

[13]. Hong Kong Exchanges and Clearing Limited. (2017). Takeovers Code (19.78-19.79) | Rulebook. https: //en-rules.hkex.com.hk/rulebook/takeovers-code-1978-1979

[14]. Hsu, S., & Li, J. (2019). China's Fintech Explosion: Disruption, Innovation, and Survival. Columbia University Press

[15]. Lee, David Kuo Chuen. (2017). Decentralization and Distributed Innovation: Catch-up and Leapfrog. Available at SSRN: https: //ssrn.com/abstract=3476510 or http: //dx.doi.org/10.2139/ssrn.3476510

[16]. Lufax Holding Ltd. (2022). Annual Reports. Lufax Holding. https: //ir.lufaxholding.com/Annual-Reports

[17]. Industrial and Commercial Bank of China. (2024). What is the interest rate for overdue loan penalty for ICBC Escrow business? https: //www.icbc.com.cn/page/721852750723055617.html

[18]. General Office of the State Council. (2020). Transcript of the State Council's Regular Policy Briefing. www.gov.cn. Retrieved from https: //www.gov.cn/xinwen/2020zccfh/22/wzsl.html

[19]. Wei, S. (2015). Internet lending in China: Status quo, potential risks and regulatory options. Computer Law & Security Review, 31(6), 793-809.

[20]. Cunningham, L. X. (2011). SMEs as motor of growth: A review of China's SMEs development in thirty years (1978–2008). Human systems management, 30(1-2), 39-54

[21]. Alkhoraif, A., Rashid, H., & McLaughlin, P. (2019). Lean implementation in small and medium enterprises: Literature review. Operations Research Perspectives, 6, 100089.

[22]. Hu, Q., Mason, R., Williams, S. J., & Found, P. (2015). Lean implementation within SMEs: a literature review. Journal of Manufacturing Technology Management, 26(7), 980-1012

[23]. National Bureau of Statistics. (2019). Rapid Growth of Small and Micro Business Enterprises - Series Report No. 14 of the Fourth National Economic Census. Retrieved from https: //www.stats.gov.cn/sj/zxfb/202302/t20230203_1900576.html

[24]. National Bureau of Statistics. (2019). Micro, Small and Medium Sized Enterprises Become an Important Force for Economic Development - Series Report No. 12 of the Fourth National Economic Census. Retrieved from https: //www.stats.gov.cn/sj/zxfb/202302/t20230203_1900574.html

[25]. Song, Na, and Isaac Appiah-Otoo. (2022). The Impact of Fintech on Economic Growth: Evidence from China. Sustainability 14, no. 10: 6211. https: //doi.org/10.3390/su14106211

[26]. Lufax Holding Ltd. (2021). Annual Reports. Lufax Holding. https: //ir.lufaxholding.com/Annual-Reports

[27]. Lufax Holding Ltd. (2023). Annual Reports. Lufax Holding. https: //ir.lufaxholding.com/image/LU+20-F+2023.pdf

[28]. Lufax Holding Ltd. (2023). Lufax reports fourth quarter and full year 2023 financial results. Lufax Holding InvestorRoom. Retrieved from https: //ir.lufaxholding.com/2024-03-21-Lufax-Reports-Fourth-Quarter-and-Full-Year-2023-Financial-Results

[29]. Lufax Holding Ltd. (2023). Lufax Lufax reports second quarter 2023 financial results. Lufax Holding InvestorRoom. Retrieved from https: //ir.lufaxholding.com/2023-08-21-Lufax-Reports-Second-Quarter-2023-Financial-Results

[30]. China Banking and Insurance Regulatory Commission. (2020). Interim Measures for Equity Management of Trust Companies. Retrieved from https: //www.gov.cn/gongbao/content/2020/content_5512565.html

[31]. China Banking and Insurance Regulatory Commission. (2020). Interim Measures for the Administration of Trust Company Funds Trusts (Exposure Draft).

[32]. China Banking and Insurance Regulatory Commission. (2020). China Banking and Insurance Regulatory Commission Measures for the Implementation of Administrative Licensing Matters for Trust Companies. https: //www.gov.cn/gongbao/content/2021/content_5585238.html

[33]. Dake, K. (2024). China Sichuan Trust unravels. Northwest Arkansas Democrat-Gazette. https: //www.nwaonline.com/news/2024/mar/14/chinas-sichuan-trust-unravels/

[34]. Schwarcz, S. (2012). Regulating Shadow Banking. Boston University Review of Banking and Financial Law.

[35]. Stein, J. C. (2010). Securitization, shadow banking & financial fragility. Daedalus, 139(4), 41-51.

[36]. Fackler, M. (2023). The Global Financial Crisis – risk transfer, insurance layers, and (lack of?) reinsurance culture. British Actuarial Journal, 28, e10. doi: 10.1017/S1357321723000120.

[37]. Sinn, H. W. (2010). Casino capitalism: How the financial crisis came about and what needs to be done now. Oxford University Press.

References

[1]. Allen, F., Gu, X., Qian, J., (2017). The People's Bank of China: History, current operations and future outlook. Unpublished SSRN Working Paper 3018506. https: //doi.org/10.2139/ssrn.3018506

[2]. Allen, F., Qian, J., Gu, X., (2015). China's financial system: Growth and risk, Foundations and Trends in Finance 9(3-4), 197-319. https: //doi.org/10.1561/0500000029

[3]. Acharya, V. V., Qian, J., Su, Y., Yang, Z., (2021). In the shadow of banks: Wealth management products and issuing banks' risks in China. Unpublished working paper, NYU Stern and Fudan University.

[4]. Allen, F., Qian, Y., Tu, G., Yu, F., (2019). Entrusted loans: A close look at China's shadow banking system. Journal of Financial Economics 133(1), 18-41. https: //doi.org/10.1016/j.jfineco.2019.01.006

[5]. Allen, F. , Gu, X. , Li, C. W. , Qian, J. Q. , & Qian, Y. (2023). Implicit guarantees and the rise of shadow banking: the case of trust products. Social Science Electronic Publishing. DOI: 10.2139/ssrn.3924888

[6]. Chen, K., Ren, J., Zha, T., (2018). The nexus of monetary policy and shadow banking in China. American Economic Review 108(12), 3891-3936. https: //doi.org/10.1257/aer.20170133

[7]. Dang, T. V., Liu, L., Wang, H., Yao, A., (2019). Shadow banking modes: The Chinese versus US System. Unpublished working paper, Columbia University. https: //doi.org/10.2139/ssrn.3491955

[8]. Kodres, L. E. (2013). What is shadow banking. Finance and Development, 50(2), 42-43.

[9]. Adrian, T. and A. Ashcraft. (2012). Shadow Banking: A Review of the Literature, Staff Report No. 380. Federal Reserve Bank of New York.

[10]. Nesvetailova, A. (2017). Shadow Banking. Scope, Origins and Theories, New York, Oxon: Routledge.

[11]. Ping An Insurance. (2024). Announcement of Ping An Insurance (Group) Company of China, Limited on the inclusion of Lufthansa Holdings Company Limited into the scope of consolidated statements of income. www.Hkexnews.Hk. Retrieved from https: //doc.irasia.com/listco/cn/pingan/announcement/sca240704b.pdf.

[12]. Dustyn DeSpain, A. V. P., & Pandolfo, J. (2024). New Small Business Lending declines as credit standards continue to tighten. Federal Reserve Bank of Kansas City. Retrieved from https: //www.kansascityfed.org/surveys/small-business-lending-survey/new-small-business-lending-declines-as-credit-standards-continue-to-tighten/

[13]. Hong Kong Exchanges and Clearing Limited. (2017). Takeovers Code (19.78-19.79) | Rulebook. https: //en-rules.hkex.com.hk/rulebook/takeovers-code-1978-1979

[14]. Hsu, S., & Li, J. (2019). China's Fintech Explosion: Disruption, Innovation, and Survival. Columbia University Press

[15]. Lee, David Kuo Chuen. (2017). Decentralization and Distributed Innovation: Catch-up and Leapfrog. Available at SSRN: https: //ssrn.com/abstract=3476510 or http: //dx.doi.org/10.2139/ssrn.3476510

[16]. Lufax Holding Ltd. (2022). Annual Reports. Lufax Holding. https: //ir.lufaxholding.com/Annual-Reports

[17]. Industrial and Commercial Bank of China. (2024). What is the interest rate for overdue loan penalty for ICBC Escrow business? https: //www.icbc.com.cn/page/721852750723055617.html

[18]. General Office of the State Council. (2020). Transcript of the State Council's Regular Policy Briefing. www.gov.cn. Retrieved from https: //www.gov.cn/xinwen/2020zccfh/22/wzsl.html

[19]. Wei, S. (2015). Internet lending in China: Status quo, potential risks and regulatory options. Computer Law & Security Review, 31(6), 793-809.

[20]. Cunningham, L. X. (2011). SMEs as motor of growth: A review of China's SMEs development in thirty years (1978–2008). Human systems management, 30(1-2), 39-54

[21]. Alkhoraif, A., Rashid, H., & McLaughlin, P. (2019). Lean implementation in small and medium enterprises: Literature review. Operations Research Perspectives, 6, 100089.

[22]. Hu, Q., Mason, R., Williams, S. J., & Found, P. (2015). Lean implementation within SMEs: a literature review. Journal of Manufacturing Technology Management, 26(7), 980-1012

[23]. National Bureau of Statistics. (2019). Rapid Growth of Small and Micro Business Enterprises - Series Report No. 14 of the Fourth National Economic Census. Retrieved from https: //www.stats.gov.cn/sj/zxfb/202302/t20230203_1900576.html

[24]. National Bureau of Statistics. (2019). Micro, Small and Medium Sized Enterprises Become an Important Force for Economic Development - Series Report No. 12 of the Fourth National Economic Census. Retrieved from https: //www.stats.gov.cn/sj/zxfb/202302/t20230203_1900574.html

[25]. Song, Na, and Isaac Appiah-Otoo. (2022). The Impact of Fintech on Economic Growth: Evidence from China. Sustainability 14, no. 10: 6211. https: //doi.org/10.3390/su14106211

[26]. Lufax Holding Ltd. (2021). Annual Reports. Lufax Holding. https: //ir.lufaxholding.com/Annual-Reports

[27]. Lufax Holding Ltd. (2023). Annual Reports. Lufax Holding. https: //ir.lufaxholding.com/image/LU+20-F+2023.pdf

[28]. Lufax Holding Ltd. (2023). Lufax reports fourth quarter and full year 2023 financial results. Lufax Holding InvestorRoom. Retrieved from https: //ir.lufaxholding.com/2024-03-21-Lufax-Reports-Fourth-Quarter-and-Full-Year-2023-Financial-Results

[29]. Lufax Holding Ltd. (2023). Lufax Lufax reports second quarter 2023 financial results. Lufax Holding InvestorRoom. Retrieved from https: //ir.lufaxholding.com/2023-08-21-Lufax-Reports-Second-Quarter-2023-Financial-Results

[30]. China Banking and Insurance Regulatory Commission. (2020). Interim Measures for Equity Management of Trust Companies. Retrieved from https: //www.gov.cn/gongbao/content/2020/content_5512565.html

[31]. China Banking and Insurance Regulatory Commission. (2020). Interim Measures for the Administration of Trust Company Funds Trusts (Exposure Draft).

[32]. China Banking and Insurance Regulatory Commission. (2020). China Banking and Insurance Regulatory Commission Measures for the Implementation of Administrative Licensing Matters for Trust Companies. https: //www.gov.cn/gongbao/content/2021/content_5585238.html

[33]. Dake, K. (2024). China Sichuan Trust unravels. Northwest Arkansas Democrat-Gazette. https: //www.nwaonline.com/news/2024/mar/14/chinas-sichuan-trust-unravels/

[34]. Schwarcz, S. (2012). Regulating Shadow Banking. Boston University Review of Banking and Financial Law.

[35]. Stein, J. C. (2010). Securitization, shadow banking & financial fragility. Daedalus, 139(4), 41-51.

[36]. Fackler, M. (2023). The Global Financial Crisis – risk transfer, insurance layers, and (lack of?) reinsurance culture. British Actuarial Journal, 28, e10. doi: 10.1017/S1357321723000120.

[37]. Sinn, H. W. (2010). Casino capitalism: How the financial crisis came about and what needs to be done now. Oxford University Press.

Cite this article

Xu,Z.;Zhu,J.;Zhou,T.;Liu,A. (2025). Risk Transfer Measures of Shadow Banks: A Case Study of Lufax. Advances in Economics, Management and Political Sciences,213,76-92.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of the 4th International Conference on Financial Technology and Business Analysis

ISBN: 978-1-80590-351-2(Print) / 978-1-80590-352-9(Online)
Editor: Lukáš Vartiak
Conference website: https://2025.icftba.org/
Conference date: 12 December 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.213
ISSN: 2754-1169(Print) / 2754-1177(Online)

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