scholarly journals The Shadow Banking System: Implications for Financial Regulation

2009 ◽  
Author(s):  
Tobias Adrian ◽  
Hyun Song Shin
Keyword(s):  
Financial Regulation ◽  
Banking System ◽  
Shadow Banking ◽  
Shadow Banking System

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.

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.

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>

scholarly journals The (Sizable) Role of Rehypothecation in the Shadow Banking System

2010 ◽  
Vol 10 (172) ◽  
pp. 1 ◽  
Author(s):  
Manmohan Singh ◽  
James Aitken ◽  
◽  
Keyword(s):  
Banking System ◽  
Shadow Banking ◽  
Shadow Banking System

Conclusion

2020 ◽  
pp. 335-356
Author(s):  
Arthur E. Wilmarth Jr.
Keyword(s):  
Conflicts Of Interest ◽  
Banking System ◽  
Financial System ◽  
Safety Net ◽  
Shadow Banking ◽  
Financial Conglomerates ◽  
Shadow Banks ◽  
Regulatory Systems ◽  
Shadow Banking System ◽  
Investment Advisers

A new Glass-Steagall Act would break up universal banks and end the conflicts of interest that prevent universal banks from acting as objective lenders and impartial investment advisers. It would produce a more stable and resilient financial system by reestablishing structural buffers to prevent contagion between the banking system and other financial sectors. It would improve market discipline by preventing banks from transferring their safety net subsidies to affiliates engaged in capital markets activities. It would shrink the shadow banking system by prohibiting nonbanks from issuing short-term financial claims that function as deposit substitutes. It would remove the dangerous influence that large financial conglomerates exercise over our political and regulatory systems. It would end the current situation in which our financial system and our economy are held hostage to the survival of universal banks and large shadow banks. It would restore our banking system and financial markets to their proper roles as servants—not masters—of nonfinancial business firms and consumers.

scholarly journals Shadow Banking in Europe: Idiosyncrasies and their Implications for Regulation

2019 ◽  
Vol 10 (4) ◽  
pp. 781-810 ◽  
Author(s):  
Hossein NABILOU ◽  
André PRÜM
Keyword(s):  
Market Structure ◽  
Driving Force ◽  
Business Models ◽  
Banking System ◽  
Shadow Banking ◽  
Regulatory Frameworks ◽  
Money Market Funds ◽  
The Us ◽  
Shadow Banking System ◽  
The Eu

This paper studies the specificities of shadow banking in Europe. It highlights striking differences between the EU and the US shadow banking sectors based on both market structure and legal micro-infrastructure of the shadow banking sectors in these two jurisdictions. It argues that these different institutional and legal infrastructures, as well as the different trajectories in the evolution of the shadow banking sectors in terms of business models, size and composition of actors and transactions, can be the driving force behind the differential regulatory treatment of shadow banking across the Atlantic. In highlighting such differences, this paper focuses on repo transactions, as the main instruments that play a significant role in credit intermediation outside the regulatory perimeter of the banking system. It then discusses money market funds and highlights differences in their structure, functioning, and their existing regulatory treatment. The paper concludes that the market structure, business models, and legacy legal and regulatory frameworks of shadow banking display substantial differences across the Atlantic. The findings in this paper rally against one-size-fits-all approaches to addressing the problems of the shadow banking system worldwide and recommends differentiated and more nuanced regulatory approaches to regulating shadow banking across the Atlantic.

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