Shadow Banking and Financial Stability Under Limited Deposit Insurance

Voellmy, Lukas

doi:10.2139/ssrn.3723441

Cited by 2 publications

(1 citation statement)

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“…The 2007-2009 global financial crisis highlighted the role of shadow banking in financial stability (Huang, 2018;Voellmy, 2019). Since then, the term shadow banking has been associated with financial stability.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Shadow Banking on the Financial Stability: Evidence from G20 Countries

2021

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Shadow banking is a term that came out of the financial crisis of 2007-2009. There is a belief that shadow banking was one of the crisis reasons. Because the excessive expansion of shadow banking endangers the financial stability of countries, this paper examines the impact of shadow banking on financial stability using data from 14 countries of the G20 during 2002-2018. We divided countries into four groups according to the level of shadow banking activity; then, we employed the quantile regression method. The results indicated that shadow banking hurts financial stability (positive impact on financial instability) in countries with a high shadow banking index (fourth group countries). One unit of increase in the shadow banking index increases financial instability in the fourth group countries (high shadow banking) by 1.6 units. But in countries where shadow banking is not very strong (other three groups), shadow banking does not significantly affect financial stability.

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Section: Introductionmentioning

confidence: 99%

The Impact of Shadow Banking on the Financial Stability: Evidence from G20 Countries

2021

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Evolution of Debt Financing Toward Less-Regulated Financial Intermediaries in the United States

Erel,

Inozemtsev

2024

J. Financ. Quant. Anal.

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Nonbank lenders have been playing an increasing role in supplying debt, especially after the Great Recession. How important are the distortions in the greater regulation of banks that differentially limit risk-taking across alternative providers of credit? How might the growing role of nonbanks in credit markets affect financial stability? This selective review addresses these questions and discusses how banks and nonbanks helped provide liquidity to the nonfinancial sector during the COVID-19 pandemic shock. We argue that tighter bank regulation has created incentives for nonbanks to increase their participation in credit markets, a trend that creates concerns about financial stability.

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Shadow Banking and Financial Stability Under Limited Deposit Insurance

Cited by 2 publications

References 46 publications

The Impact of Shadow Banking on the Financial Stability: Evidence from G20 Countries

The Impact of Shadow Banking on the Financial Stability: Evidence from G20 Countries

Evolution of Debt Financing Toward Less-Regulated Financial Intermediaries in the United States

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