Peer-to-peer online lending is transforming China’s banking sector one microloan loan at a time. Shadow banking in China has reached a staggering $4.4 trillion, or about 20 percent of the country’s total bank assets, according to estimates by the Chinese Academy of Social Sciences published in May—substantial enough to rival the country’s formal banking system, and broad enough to be a key economic driver for the world’s No. 2 economy. Increasingly China’s shadow banking is migrating online. There are now more than 2,000 websites such as Ppdai.com brokering peer-to-peer, or P2P, transactions.