The growth of a shadow banking system in emerging markets: Evidence from India

Acharya, Viral V.; Khandwala, Hemal; Öncü, T. Sabri

doi:10.1016/j.jimonfin.2013.06.024

Cited by 73 publications

(38 citation statements)

References 2 publications

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“…Shadow banking can complement traditional banking activity by enlarging access to credit, sustaining liquidity, and enabling better risk sharing, both in developing and advanced economies (Ghosh et al 2012;Acharya et al 2013;Gennaioli et al 2013;Meeks et al 2013). Indeed, shadow banking entities can conduct either all three or any one of the typical banking functions: maturity, credit and liquidity transformation.…”

Section: Introductionmentioning

confidence: 99%

The Shadow Banking System in the Euro Area: Definitions, Key Features and the Funding of Firms

2016

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We investigate the size and evolution over time of shadow banks in the euro area, with a particular focus on their role in the funding of non-financial corporations (NFCs). Using an institution-based definition of shadow banks, which is consistent with available Eurosystem data, we find that, notwithstanding a significant heterogeneity across countries, the euro-area shadow banking system has grown in importance since the outburst of the global financial crisis. In addition, also its interconnectedness with the regulated banking system has increased over time. An econometric investigation shows that macroeconomic variables are the main determinants of the growth of loans to NFCs.

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Section: Introductionmentioning

confidence: 99%

The Shadow Banking System in the Euro Area: Definitions, Key Features and the Funding of Firms

2016

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“…For example, if firms, banks, and non-banks are distributed uniformly across the country and firms choose their lenders randomly, on average, non-banks become located farther away from their customers due to the relatively small number of non-bank branches in the credit market. Although Petersen and Rajan (2002) examine whether lender type predicts distance to borrowers, this may not differentiate the effect of distinct lending practices 1 This paper excludes venture capitalists here since lending practices of venture capitalists might be signicantly different from non-bank financial institutions.…”

Section: Datamentioning

confidence: 99%

Does Lending by banks and non-banks differ? Evidence from small business financing

Han

2017

Banks and Bank Systems

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Non-bank loans to corporate businesses have shown a dramatic increase compared to bank loans. Despite the increasing importance of non-bank lending, the differences between loans made by different types of lenders are mostly unknown. To uncover the distinctions, the author investigates whether bank and non-bank financial institutions deal differently with information scarcity of small firms by introducing lender-borrower distance as a proxy for information availability.Using the National Survey of Small Business Finances (NSSBF) provided by the Federal Reserve Board, the loan approval probability models after controlling for various borrower characteristics are estimated. The NSSBF data is collected by using stratified sampling to ensure sufficient numbers of observations for minority-owned firms. To circumvent potential bias due to the sampling method, the author follows the approach suggested by Wooldridge (1999) and estimates a weighted maximum likelihood estimation to adjust for sampling design. This paper establishes novel evidence supporting the notion that banks and non-bank financial institutions are different in their ability to deal with information scarcity. Bank loan approval probability decreases as distance to their borrowers increases, while its effect on non-bank loan approval probability is statistically insignificant, supporting the notion that non-bank lending is different from bank lending in dealing with information asymmetry.

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“…For example, in securitization shadow banking strips assets of credit and liquidity risks through tranching and providing liquidity puts (Pozsar et al 2010;Gennaioli et al 2012). Or it facilitates the use of collateral to reduce counterparty exposures in repo markets and for OTC derivatives (Gorton 2012;Acharya and Öncü 2013).…”

Section: B Why Do Shadow Banking Activities Always Rely On a Backstop?mentioning

confidence: 99%

“…Another is public -by using explicit or implicit government guarantees. Examples include, besides the general implicit guarantee provided to the "too-big-to-fail," large banks active in shadow banking, the Federal Reserve securities lending facility (TSLF) that backstops the collateral intermediation processes, the implicit too-big-to-fail guarantees for tri-party repo clearing banks and other dealer banks , the bankruptcy stay exemptions for repos which in effect guarantee the exposure of lenders (Perotti, 2013), or the implicit, reputational and other guarantees on bank-affiliated products (as widely described in the press regarding so called "wealth management products" in China; Lardy, 2013) or on liabilities of non-bank finance companies (as noted for India; Acharya et al, 2013).…”

Section: B Why Do Shadow Banking Activities Always Rely On a Backstop?mentioning

confidence: 99%

What is Shadow Banking?

Claessens

Ratnovski

2015

SSRN Journal

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The growth of a shadow banking system in emerging markets: Evidence from India

Cited by 73 publications

References 2 publications

The Shadow Banking System in the Euro Area: Definitions, Key Features and the Funding of Firms

The Shadow Banking System in the Euro Area: Definitions, Key Features and the Funding of Firms

Does Lending by banks and non-banks differ? Evidence from small business financing

What is Shadow Banking?

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