Published: 5:02pm, 26 Feb, 2017 Updated: 8:46pm, 20 Jul, 2018
China 's smaller banks are vulnerable to liquidity problems , which could result in bank runs or bankruptcies , because of investments they have made using unstable wholesale funding streams , warn investors , “ The liquidity rate for joint stock commercial banks is certainly rising , especially when rates increase , ” says Natixis ' chief economist , Alicia Garcia - Hererro . Furthermore , technical defaults are not impossible if banks continually issues accessing liquidity when fears of counterparty risk loom , warns DBS economist Nathan Chow . Tougher rules governing smaller banks ' exposure to shadow banking can also increase the risk of financial problems .