As a result, many want to make more individual loans to increase profits, although they know the borrowers may use the money to invest in the stock market.

Bankers believe that the current stock market will continue to rise despite occasional corrections. Their thinking is that the risks for the investors will not be very high.

Not entirely at risk, the banks are covered by the borrowers' mortgages. If the borrowers suffer severe losses on stock investments, the banks can sell the collateral to retrieve part of the loans, limiting their overall risk.

Therefore, the commercial banks may not be adequately motivated to follow the CBRC orders to stop such lending.

Moreover, those who want to borrow from the banks to invest in the stock market may resort to some financial maneuvers to circumvent the banks' tracking the loans.

As a result, although the regulators have taken a harsh stance, it is hard for them to stop bank loans from flowing into the stock market simply by pressuring the banks.

The stock regulators have repeatedly reminded investors of the potential risks of the market. Although risks are intrinsic to the stock market, as long as investors expect to profit, they will find ways to obtain funds to invest.

Even if the regulators can plug the commercial bank loopholes, investors can secure money from other sources. This would make regulating such money flows even more difficult.

Other countries' experience shows that it may be better for regulators to take a more liberal stance toward such investment zest rather than trying to control the barely controllable flow of capital.

In developed countries, banking regulators generally stipulate a series of strict bottom-line rules for commercial banks to issue loans.

For example, in the United States, where the bad loan ratio is quite low compared with other countries, the banks cannot issue loans worth more than 90 percent of the mortgaged property, such as buildings.

With those requirements met, the lending risks are under control and the banks are allowed to make loans without keeping track of how the money is used. The borrowers can use the money to buy stocks so long as they meet the loan requirements.

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