scholarly journals Shadow banking: Regulatory Reform and Its Effectiveness

2019 ◽  
Vol 23 (4) ◽  
pp. 69-79
Author(s):  
V. M. Usoskin
Keyword(s):  
Financial Crisis ◽  
Financial Institutions ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Financial System ◽  
Regulatory Reform ◽  
Shadow Banking ◽  
Systemic Risks ◽  
Global Financial System

Over the past three decades, a large group of non-bank financial institutions has been formed in the world economy. These institutions fall outside the realm of traditional banking and take an active part in the lending processes of economic turnover entities. The activities of these institutions, called the shadow banking system (SBS), led to an increase in systemic risks and had a negative impact on the state of the global financial system. This was distinctly displayed during the global financial crisis of 2007–2009. The subject of this article is a series of measures taken by the international and national financial control bodies after the financial crisis to eliminate most risky aspects of shadow banking and to strengthen the system of financial oversight and monitoring. The final aim of the analysis is to evaluate effectiveness of the measures on strengthening control and limiting risks applied by the control bodies of the G-20 countries in the course of the reform to enterprises of the traditional and shadow sectors of the financial system. The results of the analysis show that the reform strengthened positions of traditional banks and improved their ability to resist financial shocks. As to the shadow banking sector, contrary to the statements of the initiators of the reform the regulative measures did not eliminate the systemic risks peculiar to nonbank financial institutions and did not stop their growing activities. This situation threatens the stability of the global financial system and a possibility of a new financial slump retains.

COVID -19 and Indian Financial Markets: A Review

2020 ◽  
Vol 16 (02) ◽  
pp. 1-8
Author(s):  
Kamaldeep Kaur Sarna
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Financial Services ◽  
Stock Markets ◽  
Global Economy ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Management Strategies ◽  
The Impact

COVID-19 is aptly stated as a Black Swan event that has stifled the global economy. As coronavirus wreaked havoc, Gross Domestic Product (GDP) contracted globally, unemployment rate soared high, and economic recovery still seems a far-fetched dream. Most importantly, the pandemic has set up turbulence in the global financial markets and resulted in heightened risk elements (market risk, credit risk, bank runs etc.) across the globe. Such uncertainty and volatility has not been witnessed since the Global Financial Crisis of 2008. The spread of COVID-19 has largely eroded investors’ confidence as the stock markets neared lifetimes lows, bad loans spiked and investment values degraded. Due to this, many turned their backs on the risk-reward trade off and carted their money towards traditionally safer investments like gold. While the banking sector remains particularly vulnerable, central banks have provided extensive loan moratoriums and interest waivers. Overall, COVID-19 resulted in a short term negative impact on the financial markets in India, though it is making a way towards V-shaped recovery. In this context, the present paper attempts to identify and evaluate the impact of the pandemic on the financial markets in India. Relying on rich literature and live illustrations, the influence of COVID-19 is studied on the stock markets, banking and financial institutions, private equities, and debt funds. The paper covers several recommendations so as to bring stability in the financial markets. The suggestions include, but are not limited to, methods to regularly monitor results, establishing a robust mechanism for risk management, strategies to reduce Non-Performing Assets, continuous assessment of stress and crisis readiness of the financial institutions etc. The paper also emphasizes on enhancing the role of technology (Artificial Intelligence and Virtual/Augmented Reality) in the financial services sector to optimize the outcomes and set the path towards recovery.

Lehren aus der Krise – Notwendige Änderungen der Finanzmarktregeln und zur Begrenzung systemischer Risiken

2009 ◽  
Vol 58 (3) ◽  
Author(s):  
Otmar Issing ◽  
Stephany Griffith-Jones ◽  
Stefano Pagliari ◽  
Claudia M. Buch ◽  
Katja Neugebauer
Keyword(s):  
Financial Crisis ◽  
Systemic Risk ◽  
Financial Stability ◽  
Market Failure ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Systemic Risks ◽  
State And Market ◽  
Bank For International Settlements ◽  
The International Monetary Fund

AbstractThe latest financial crisis has been caused by a mixture of state and market failure, argues Otmar Issing. To avoid future crises, more transparency is needed - not by gathering more information, but by gathering it systematically and thereby creating “intelligent transparency”. Furthermore, regulation has to be global, he states. The necessary institutions are in place: The International Monetary Fund, the Financial Stability Board and the Bank for International Settlements.Stephany Griffith-Jones and Stefano Pagliari point out, that containing “systemic risk” is one of the most important rationales for regulating financial markets. Our understanding of the sources of systemic risk has repeatedly been challenged by major episodes of financial instability. The crisis that started in the summer of 2007 has been no exception. They discuss how the latest global financial crisis urges analysts and regulators to rethink the origin of systemic risk beyond a narrow focus on the banking sector, beyond the “too big to fail problem”, and beyond a narrow micro-prudential focus. They focus on two regulatory principles: comprehensiveness and countercyclicality.Claudia Buch und Katja Neugebauer review the existing empirical evidence on whether the increase in cross-border activities has allowed banks to diversify risks and to what extent it has increased banks’ exposure to systemic risks.

scholarly journals IMPACT OF SHADOW BANKING ACTIVITIES AS NON BANK INTERMEDIATION TOWARD REGULATORY DEVELOPMENTS IN FUNCTION CONTROL OF FINANCIAL SERVICES SECTOR IN INDONESIA

2016 ◽  
Vol 1 (1) ◽  
pp. 47
Author(s):  
Lastuti Abubakar ◽  
C. Sukmadilaga ◽  
Tri Handayani
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Financial Stability ◽  
Banking Sector ◽  
Banking Regulation ◽  
Shadow Banking ◽  
Services Sector ◽  
Financial Services Sector ◽  
Analytical Research ◽  
Global Financial System

Based on the Global Shadow Banking Monitory Report 2015 issued by the Financial Stability Board, global shadow banking activities manage 80% of global GDP and 90% of the global financial system assets. Hence, this study aimed to examine the regulation and supervision of shadow banking activities in Indonesia. The method used is normative juridical with descriptive analytical research specifications. Based on the research results as follows : regulation of shadow banking in Indonesia's financial services sector covers all financial institutions outside the banking sector or Non-Bank Financial Institutions that the regulations are scattered in various rules. Indonesia has developed an integrated surveillance system for the entire financial services sector, include NBFIs. Development of shadow banking regulation will be based on the strengthening of reporting, monitoring, supervision and regulation. Keywords : regulatory developments, shadow banking, and supervision

Liquidity, Leverage, and Regulation 10 Years After the Global Financial Crisis

2018 ◽  
Vol 10 (1) ◽  
pp. 1-24 ◽  
Author(s):  
Tobias Adrian ◽  
John Kiff ◽  
Hyun Song Shin
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Financial System ◽  
Regulatory Reform ◽  
Market Liquidity ◽  
Current Evidence ◽  
Balance Sheets ◽  
Reform Agenda ◽  
The Global Financial Crisis ◽  
The Impact

The financial system has undergone far-reaching changes since the global financial crisis of 2008. We cast those changes in terms of shifts in the manner in which financial intermediaries manage their balance sheets. We also discuss the regulatory reform agenda, and we review the impact of regulations on market liquidity and credit availability. Current evidence suggests that the financial system has become safer, at limited unintended cost.

Shedding Light on Shadow Banking

2018 ◽  
Vol 82 (3) ◽  
pp. 264-276
Author(s):  
Doron Goldbarsht
Keyword(s):  
Financial Markets ◽  
Money Laundering ◽  
Financial Institutions ◽  
Financial System ◽  
Financial Sector ◽  
Shadow Banking ◽  
International Network ◽  
Payment Mechanisms ◽  
The Relationship ◽  
Global Financial System

Excessive regulatory practices to combat anti-money laundering (AML) have the potential to ‘de-bank’ entire regions and deprive certain communities of their participation in traditional financial markets. While protecting the integrity of the global financial system and shutting down some illicit activities, this may also facilitate the development of alternative remittance systems (ARSs) and payment mechanisms, the so-called shadow banking systems, where AML compliance is not adequate. This article will critically re-examine the relationship between the overregulation of financial markets and the shift to ARSs. It will propose a new take on ARS to include illicit activities through an international network of financial institutions and the need for the regulators to consider a better methodology for detecting ARSs outside the conventional financial sector to deal with this problem.

scholarly journals ANALYSIS OF THE FINANCIAL STATUS OF THE BANKING SECTOR OF UKRAINE

2020 ◽  
pp. 155-162
Author(s):  
D. Tsyhaniuk ◽  
A. Rudniak
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Banking System ◽  
Financial Condition ◽  
Systemic Risks ◽  
Significant Negative Impact ◽  
The Global Financial Crisis ◽  
The Impact

Considering the significant negative impact of financial crises on the banking sector in Ukraine, issues related to the assessment of the financial condition of banks are becoming particularly relevant. Analysis of the impact of the global financial crisis on the activities of Ukrainian banks in recent years has led to the conclusion that an effective, working mechanism for anti-crisis management has not yet been developed, focused on forecasting, overcoming, and limiting the spread of the crisis in the banking system. In this study, we analyzed the state of the banking system of Ukraine, the factors of crises that affected the financial condition of the banking sector of Ukraine in the context of 2009-2019; studied the main performance indicators of banks currently operating in Ukraine; analyzed the financial results of banking activities; Identified systemic risks that operate in the banking sector, as well as the largest risk factors for the financial sector. Calculated indicators of financial stability indicated the existence of systemic risks. According to the results of our study, the dynamics of the ratio of non-performing loans pointed out that the banking system of Ukraine, along with the unstable political and general economic situation, further increases systemic risks for the banking system and for the economy in the entirety; analysis of the Z-score indicator confirmed the presence of systemic risks and clearly demonstrated the duration and level of the crisis; an analysis of the dynamics and the political component of the country's incapacity index indicated that now Ukraine is in the most volatile situation in the last decade.

The Finance Franchise

2018 ◽  
Author(s):  
Robert C. Hockett ◽  
Saule T. Omarova
Keyword(s):  
Financial Institutions ◽  
Banking Sector ◽  
Financial System ◽  
Basic Structure ◽  
Shadow Banking ◽  
Financial Flows ◽  
The Core ◽  
Structure And Dynamics ◽  
Public Resource ◽  
Ultimate Source

102 Cornell Law Review 1143 (2017)The dominant view of banks and other financial institutions is that they function primarily as intermediaries, managing flows of scarce funds from those who have accumulated them to those who have need of them and can pay for their use. This understanding pervades textbooks, scholarly writings, and policy discussions – yet it is fundamentally false as a description of how a modern financial system works. Finance today is no more primarily “intermediated” than it is pre-accumulated or scarce.This Article challenges the outdated narrative of finance as intermediated scarce private capital and maps the basic structure and dynamics of the financial system as it actually operates. We begin by developing a three-part taxonomy of ways to model financial flows – what we call the “credit-intermediation,” “credit-multiplication,” and “credit-generation” models of finance. We show that only the last model captures the core dynamic of a complex modern financial system, and that the ultimate source of credit-generation in any such system is the sovereign public, acting primarily through its central bank and treasury. We then trace the operation of this dynamic throughout the financial system, from the banking sector, through the capital and “shadow banking” markets, all the way out to the “disruptive” frontier of peer-to-peer digital finance.What emerges from this retracing of the financial system’s operative logic is a comprehensive view of modern finance as a public-private franchise arrangement. On this view, the sovereign public acts effectively as franchisor, licensing private financial institutions to earn rents as franchisees in dispensing a vital public resource: the public’s monetized full faith and credit. We conclude the Article by drawing out some of the potentially transformative analytic and normative implications of a paradigmatic shift from the orthodox theory of financial intermediation to the franchise view of finance.

The Political Economy of Global Finance Capital

2009 ◽  
Vol 61 (4) ◽  
pp. 731-763 ◽  
Author(s):  
Richard Deeg ◽  
Mary A. O'Sullivan
Keyword(s):  
Political Economy ◽  
Financial Crisis ◽  
Domestic Politics ◽  
Global Financial Crisis ◽  
Financial System ◽  
Future Research ◽  
The Political ◽  
Global Finance ◽  
Private Regulation ◽  
Global Financial System

The globalization of finance in recent years and the concurrent growth in the financial sector's influence, manifested most dramatically in the recent financial crisis, highlights the importance for political scientists of understanding the political economy of global finance. The authors review six important books that are representative of recent thinking by political scientists on the topic. They address the central questions that have been at the heart of the literature on global finance from its beginning in new and interesting ways. The most important developments highlighted in this article are the move from a predominant focus on state-centered patterns of regulation to the consideration of transnational governance regimes that mix public and private regulation; the effort to understand the causal forces that shape the political economy of global finance by allowing for an interaction among interests, institutions, and ideas; and giving increased attention to new sources of systemic risk in the global financial system, as well to the consequences for domestic politics of interactions with the global financial system. Notwithstanding the progress that has been made in coming to grips with the political economy of global finance, the authors highlight a number of questions that need to be addressed in future research. Although various nonstate actors have been recognized as important in the constitution of the rules of global finance, it is also necessary to understand the behavior of the actors who enact these rules. It is also important to generate evidence that forges some agreement on the causes of the globalization of finance, especially as the arguments made become more complex. Finally, there is a need for a more realistic assessment of the costs and benefits of financialization at the global and national levels. This last challenge is essential for a thorough understanding of the current global financial crisis.

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