Macroprudential regulation and leakage to the shadow banking sector

Gebauer, Stefan; Mazelis, Falk

doi:10.1016/j.euroecorev.2023.104404

Cited by 13 publications

(3 citation statements)

References 66 publications

(25 reference statements)

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“…Irani et al ( 2021) utilize U.S. data to point out that loan migration from capital-intense traditional banks into shadowy non-banks increases the financial system's fragility and the price volatility of relevant assets. Gebauer and Mazelis (2023) build a theoretical model that capital-based regulation on traditional banks will help drive the growth of shadow banking. Lyonnet and Chretien (2023) document traditional bank and shadow banking's coexistence and regulation-evasion-based relation in the U.S., using money market mutual funds (MMMF) as a proxy for shadow banking.…”

Section: Literature Reviewmentioning

confidence: 99%

China’s shadow banking in 2020–2022: an empirical study

2024

Humanit Soc Sci Commun

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Despite renewed regulatory attention, shadow banking across the globe is still a nonnegligible part of economic life. This paper researches China’s shadow banking during 2020–2022, a stage marked by COVID-19 and strengthened global regulation on Non-Bank Financial Intermediation (NBFI). Its business model surprisingly resembles its Western peers, funding underserved sectors and having similar exposure to balance sheet mismatch. Uninsured interbank funds and wealth management products support massive holding of bond investment (36.6% of the total assets), making risk contagion easier. This paper re-summarizes growth dynamics in a “Pull-Push” framework and proposes the concept of reintermediation corresponding to disintermediation. Consecutive regulation on NBFI and the real estate sector kept dragging on growth, rendering it in liquidity surplus. We provide empirical evidence on the relationship of China’s shadow banking with macro-finance and note several breakdowns of pre-pandemic relations among economic and financial indicators. The most remarkable breakdown is the weakened functionality of the monetary policy transmission channel. Besides, it continued to twist financial regulatory indicators to a lesser extent.

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Section: Literature Reviewmentioning

confidence: 99%

China’s shadow banking in 2020–2022: an empirical study

2024

Humanit Soc Sci Commun

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“…As stated by Hordofa [70], extensive research examining the impact of regulatory changes on bank dividend policies has revealed a multifaceted and dynamic relationship. Deviations from capital adequacy regulations and other pertinent regulatory parameters directly influence dividend distribution [71]. DeAngelo [72] stresses that conservative dividend strategies are frequently adopted when more stringent regulations are enforced, with financial stability taking precedence over shareholder returns.…”

Section: Regulatory Impactmentioning

confidence: 99%

Quantitative Analysis and Comparative Review of Dividend Policy Dynamics within the Banking Sector: Insights from Global and U.S. Financial Data and Existing Literature

Olaniyi,

Shah,

Bahuguna

2023

AJEBA

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This paper presents a comparative review of academic research on dividend policies and payments within the banking sector. Dividends represent a critical area of focus due to their implications for bank capital levels, profitability, regulatory compliance, and investor signaling. The literature reviewed spans pre- and post-2008 financial crisis periods and adopts both global and emerging market perspectives. Methodologies include regression analyses, causality tests, descriptive statistics, and financial ratio computations based on regulatory filings, financial statements, and market data datasets. Key findings demonstrate the multifaceted nature of bank dividend strategies, differences across countries, shifts during crises, and complex interplays with financial health metrics. The studies find evidence that dividends provide valuable signals to investors on earnings prospects, aligning with signaling theories. However, interpreting crisis-induced behaviors warrants caution due to short-term deviations. Opportunities exist for further analysis of cross-country variances, crisis responses, and linkages to bank stability. This comparative review enhances academic comprehension of bank dividend policies' motivations, outcomes, and determinants. It highlights the need for judicious balancing of stakeholder demands for returns and growth, an increasingly crucial endeavor amidst global uncertainty.

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“…Moreover, they tend to operate with much less regulatory supervision, which leads to excessive risk-taking. Consequently, they are substantially less stable than conventional banks (Pozsar et al , 2013; Adrian and Ashcraft, 2016; Bengtsson, 2016; Gebauer and Mazelis, 2023).…”

Section: Introductionmentioning

confidence: 99%

Shadow banking and non-performing loans: international evidence

Isayev,

Farooq

2024

JFRC

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Purpose This paper aims to document the impact of shadow banking on non-performing loans (NPLs) of publicly listed banks in an international setting. Design/methodology/approach This paper uses the data from 27 countries and various estimation strategies to test the arguments presented in this paper. The sample covers the period between 2002 and 2020. Findings The empirical results suggest that banks headquartered in countries with high shadow banking activity have fewer NPLs than otherwise similar banks headquartered in countries with low shadow banking activity. The findings remain qualitatively the same in different sub-samples and after replacing the main variables with their alternate proxies. The paper also shows that this relationship is sensitive to bank-specific characteristics. Moreover, the paper also indicates that the stringency of banking regulations weakens the relationship between shadow banking and NPLs. Research limitations/implications The study’s data limitations prevent a detailed year-by-year analysis of NPLs and shadow banking, restricting insights into their evolving dynamics. In addition, the focus on country-level shadow banking data limits the exploration of how multinational banks’ activities in various jurisdictions impact individual banks’ NPLs. Originality/value The paper not only documents the effect of shadow banking on NPLs but also shows that the relationship between shadow banking and NPLs weakens as banking regulations become more stringent.

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Macroprudential regulation and leakage to the shadow banking sector

Cited by 13 publications

References 66 publications

China’s shadow banking in 2020–2022: an empirical study

China’s shadow banking in 2020–2022: an empirical study

Quantitative Analysis and Comparative Review of Dividend Policy Dynamics within the Banking Sector: Insights from Global and U.S. Financial Data and Existing Literature

Shadow banking and non-performing loans: international evidence

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