scholarly journals A Simple Fix for a Complex Problem? Comments on Morgan Ricks, The Money Problem: Rethinking Financial Regulation

2017 ◽  
Vol 8 (2) ◽  
Author(s):  
Margaret M. Blair
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Financial Regulation ◽  
Banking System ◽  
Complex Problem ◽  
Shadow Banking ◽  
Reform Legislation ◽  
Policy Analysts ◽  
Shadow Banking System ◽  
The U.S

Abstract The financial crisis of 2007–2009 left scholars and policy analysts scrambling to explain what went wrong. While a variety of stories have been told, none have seemed like they could account for the magnitude of the collapse in securities values, or the devastation the collapse caused to the performance of whole economies around the globe, nor could they offer a clear path to reform. Legislation passed to reform the financial system in the U.S. is extraordinarily complex, and still very controversial. Now, however, Morgan Ricks’ new book, The Money Problem: Rethinking Financial Regulation, cuts through the complexity to offer a relatively simple but compelling explanation – the crisis was a consequence of an old-fashioned run on the “bank”, which, in this case, was the shadow banking system rather than regular banks. The solution is the same as the solution that prevented major financial crises in the U.S. from the 1930s to 2007 – government insurance of “money claims” and stricter regulation of firms that are allowed to issue money-like claims.

scholarly journals Overhauling China’s Financial Stability Regulation: Policy Riddles and Regulatory Dilemmas

2017 ◽  
Vol 4 (1) ◽  
pp. 1-57 ◽  
Author(s):  
Emilios AVGOULEAS ◽  
Duoqi XU
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Financial Regulation ◽  
Banking System ◽  
Big Bang ◽  
Shadow Banking ◽  
Financial Repression ◽  
Leverage Ratio ◽  
Regulation Policy ◽  
Shadow Banking System

AbstractChina faces a number of important financial-stability risks. A persistent feature of the Chinese banking sector is the rapid formation of non-performing loans (NPLs) during each business cycle. Moreover, lending restrictions and interest-rate caps (“financial repression”) have, in part, given rise to an ever-expanding shadow-banking sector. The article highlights five cardinal sins within the Chinese financial system: (1) bad lending practices by the regulated sector, (2) lax governance, (3) a shadow-banking system that is dominated by short-term claims with no liquidity backstop, (4) stark lack of transparency in the shadow sector, and (5) very high levels of interconnectedness between the shadow and the regulated sector. The article suggests that some of these problems will be alleviated through a regulatory big bang that would abolish the current silo approach to financial regulation streamlining financial stability and conduct/consumer-protection supervision. Furthermore, we recommend the introduction of a binding and all-encompassing leverage ratio that will require banks to hold much higher capital buffers as a means to boost bank resilience, reduce NPLs, and battle interconnectedness with the shadow sector.

Alcune considerazioni sullo Shadow Banking System

2012 ◽  
pp. 69-87
Author(s):  
Figuera Stefano
Keyword(s):  
Financial Crisis ◽  
Systemic Risk ◽  
Financial Intermediation ◽  
Banking System ◽  
Shadow Banking ◽  
Production Theory ◽  
Recent Period ◽  
Capitalist Economy ◽  
Efficient Control ◽  
Shadow Banking System

The financial intermediation system has been characterized by the emergence of new subjects and instruments modifying its organization. The development of the shadow banking system parallel to the traditional one has led to the demand, during the recent period of financial crisis, for a more efficient control to weather the growing systemic risk. This changing context leads the Author to consider some essential profiles of the monetary nature of the capitalist economy. Specifically, a need is perceived to reinterpret recent events in the light of the credit nature of money and the endogenous character of its supply, aspects on which scholars of the Keynesian school have long focused their attention. The Author considers particularly useful the indications deriving from the monetary production theory, especially with reference to the distinction among the various forms of financing, to understand such changes and adopt suitable strategies to handle them.

Non-banking financial intermediation and phenomena of shadow money in modern economy

2021 ◽  
Vol 27 (8) ◽  
pp. 1694-1709
Author(s):  
Vladimir K. BURLACHKOV
Keyword(s):  
Commercial Banks ◽  
Financial Intermediation ◽  
Banking System ◽  
Banking Regulation ◽  
Developed Countries ◽  
Bank Credit ◽  
Shadow Banking ◽  
Economic Agents ◽  
Shadow Banking System ◽  
Lending Activity

Subject. The article addresses the non-banking financial intermediation (shadow banking system) as it is successfully expanding nowadays both in developed countries and emerging economics. Objectives. The study aims at conducting a comprehensive analysis of the specifics of non-banking financial intermediation, revealing its impact on economic agents’ activities, causes and consequences, and elaborating the methodological framework for effectiveness of modern monetary policy. Methods. I employ methods of scientific abstraction, induction, deduction, synthesis, and comparative analysis. Results. In the modern national economy, along with the money, created by the central bank and commercial banks, there are highly liquid financial instruments called shadow money. The scope of its application is shadow banking (financial intermediation) outside the banking system. The use of shadow money is caused by high demand for credit resources. Conclusions. The high activity of shadow banking and increased turnover of shadow money resulted from a transfer to Basel standards of banking regulation in the 1990s, which affected the lending activity of commercial banks. Under these conditions, the demand for loans provided by non-bank credit and financial institutions increased. The market of non-bank credit products was formed. However, the process of lending in the shadow banking is associated with high risks and non-stability of shadow money, widely used in this sphere.

Exploring the Dynamic Relationship in the Shadow Banking System

2016 ◽  
Author(s):  
Majid Haghani Rizi ◽  
Narayan K. Kishor ◽  
Hardik Marfatia
Keyword(s):  
Banking System ◽  
Shadow Banking ◽  
Dynamic Relationship ◽  
Shadow Banking System

scholarly journals Competitive Advantages of Shadow Banking Industry: An Analysis Using Porter Diamond Model

2015 ◽  
Vol 6 (2) ◽  
pp. 15 ◽  
Author(s):  
Arash Riasi
Keyword(s):  
Systemic Risk ◽  
Banking Industry ◽  
Banking System ◽  
Firm Strategy ◽  
The Other ◽  
Shadow Banking ◽  
Competitive Advantages ◽  
Diamond Model ◽  
Shadow Banking System ◽  
Global Financial System

<p>This paper tries to find out why shadow banking system has become so competitive in the global financial system and how it can be controlled. For this reason we use Porter’s diamond model to find the competitive advantages of shadow banking. Based on the results of this study it can be concluded that factor conditions, chance and government do not contribute to the competitiveness of shadow banking industry. On the other hand the results suggested that related and supporting industries, firm strategy, structure and rivalry, and demand conditions contribute to the competitiveness of shadow banking industry. It is important to regulate the activities of shadow banking industry in order to prevent this industry from creating systemic risk.</p>

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