IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2014-010.html
   My bibliography  Save this paper

Mapping the Shadow Banking System Through a Global Flow of Funds Analysis

Author

Listed:
  • Mr. Luca Errico
  • Artak Harutyunyan
  • Ms. Elena Loukoianova
  • Richard Walton
  • Ms. Yevgeniya Korniyenko
  • Hanan AbuShanab
  • Mr. Hyun S Shin

Abstract

This paper presents an approach to understanding the shadow banking system in the United States using a new Global Flow of Funds (GFF) conceptual framework developed by the IMF’s Statistics Department (STA). The GFF uses external stock and flow matrices to map claims between sector-location pairs. Our findings highlight the large positions and gross flows of the U.S. banking sector (ODCs) and its interconnectedness with the banking sectors in the Euro area and the United Kingdom. European counterparties are large holders of U.S. other financial corporations (OFCs) debt securities. We explore the relationship between credit to domestic entities and the growth of non-core liabilities. We find that external debt liabilities of the financial sector are procyclical and are closely aligned with domestic credit growth.

Suggested Citation

  • Mr. Luca Errico & Artak Harutyunyan & Ms. Elena Loukoianova & Richard Walton & Ms. Yevgeniya Korniyenko & Hanan AbuShanab & Mr. Hyun S Shin, 2014. "Mapping the Shadow Banking System Through a Global Flow of Funds Analysis," IMF Working Papers 2014/010, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2014/010
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=41273
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1996. "Inflows of Capital to Developing Countries in the 1990s," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 123-139, Spring.
    2. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    3. Tobias Adrian & Adam B. Ashcraft, 2012. "shadow banking: a review of the literature," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    4. Bank for International Settlements, 2011. "Global liquidity - concept, measurement and policy implications," CGFS Papers, Bank for International Settlements, number 45, december.
    5. Bank for International Settlements, 2010. "Funding patterns and liquidity management of internationally active banks," CGFS Papers, Bank for International Settlements, number 39, december.
    6. Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-1061, April.
    7. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
    8. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    9. Tobias Adrian & Hyun Song Shin, 2010. "The Changing Nature of Financial Intermediation and the Financial Crisis of 2007–2009," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 603-618, September.
    10. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Grillet-Aubert, Laurent & Haquin, Jean-Baptiste & Jackson, Clive & Killeen, Neill & Weistroffer, Christian, 2016. "Assessing shadow banking – non-bank financial intermediation in Europe," ESRB Occasional Paper Series 10, European Systemic Risk Board.
    2. Stefan Avdjiev & Bryan Hardy & Şebnem Kalemli-Özcan & Luis Servén, 2022. "Gross Capital Flows by Banks, Corporates, and Sovereigns," Journal of the European Economic Association, European Economic Association, vol. 20(5), pages 2098-2135.
    3. Artak Harutyunyan & Mr. Alexander Massara & Giovanni Ugazio & Goran Amidžic & Richard Walton, 2015. "Shedding Light on Shadow Banking," IMF Working Papers 2015/001, International Monetary Fund.
    4. Herman, Alexander & Igan, Deniz & Solé, Juan, 2017. "The macroeconomic relevance of bank and nonbank credit: An exploration of U.S. data," Journal of Financial Stability, Elsevier, vol. 32(C), pages 124-141.
    5. Galati, Gabriele & Hindrayanto, Irma & Koopman, Siem Jan & Vlekke, Marente, 2016. "Measuring financial cycles in a model-based analysis: Empirical evidence for the United States and the euro area," Economics Letters, Elsevier, vol. 145(C), pages 83-87.
    6. Dinc, Yusuf, 2015. "Conversion From Shadow Banking to Regular Banking an Emperical Analysis," MPRA Paper 85333, University Library of Munich, Germany.
    7. Satoru Hagino & Jiyoung Kim, 2021. "Compilation and analysis of international from-whom-to-whom financial stock table for Japan, Korea, the United States, and China," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-27, December.
    8. Engin Yilmaz & Bora Suslu, 2016. "Turkish Non-Core Bank Liabilities," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(1), pages 75-92.
    9. Hodula, Martin & Melecky, Ales & Machacek, Martin, 2020. "Off the radar: Factors behind the growth of shadow banking in Europe," Economic Systems, Elsevier, vol. 44(3).
    10. Financial Stability Committee, Task Force on cross-border Spillover Effects of macroprudential measures & Kok, Christoffer & Reinhardt, Dennis, 2020. "Cross-border spillover effects of macroprudential policies: a conceptual framework," Occasional Paper Series 242, European Central Bank.
    11. Anna Maria Agresti & Rok Brence, 2017. "Statistical work on shadow banking: development of new datasets and indicators for shadow banking," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Data needs and Statistics compilation for macroprudential analysis, volume 46, Bank for International Settlements.
    12. Kalemli-Özcan, Sebnem & Servén, Luis & Avdjiev, Stefan & Hardy, Bryan, 2017. "Gross Capital Inflows to Banks, Corporates and Sovereigns," CEPR Discussion Papers 11806, C.E.P.R. Discussion Papers.
    13. Martin Hodula, 2018. "Off the Radar: Exploring the Rise of Shadow Banking in the EU," Working Papers 2018/16, Czech National Bank.
    14. Alexander Herman & Ms. Deniz O Igan & Mr. Juan Sole, 2015. "The Macroeconomic Relevance of Credit Flows: An Exploration of U.S. Data," IMF Working Papers 2015/143, International Monetary Fund.
    15. Luiza Antoun de Almeida, 2015. "A Network Analysis of Sectoral Accounts: Identifying Sectoral Interlinkages in G-4 Economies," IMF Working Papers 2015/111, International Monetary Fund.
    16. Subroto Rapih, 2021. "Shadow banking and cross-border capital inflows: Does the development level of financial institutions matter?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(3), pages 331-355, September.
    17. Shugo Yamamoto, 2020. "Global Liquidity,Offshore Bond Issuance and Shadow Banking in China," Discussion Papers 2011, Graduate School of Economics, Kobe University.
    18. Nielsen, Carsten Krabbe & Weinrich, Gerd, 2023. "Bank regulation and market structure," International Journal of Industrial Organization, Elsevier, vol. 88(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bruno, Valentina & Shin, Hyun Song, 2015. "Capital flows and the risk-taking channel of monetary policy," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 119-132.
    2. Valentina Bruno & Hyun Song Shin, 2015. "Cross-Border Banking and Global Liquidity," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 535-564.
    3. Valentina Bruno & Hyun Song Shin, 2013. "Capital Flows, Cross-Border Banking and Global Liquidity," NBER Working Papers 19038, National Bureau of Economic Research, Inc.
    4. Rey, Hélène, 2015. "Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence," CEPR Discussion Papers 10591, C.E.P.R. Discussion Papers.
    5. Pedro Araujo & Olena Mykhaylova & James Staveley-O’Carroll, 2015. "Financial liberalization and patterns of international portfolio holdings," Empirical Economics, Springer, vol. 49(1), pages 213-234, August.
    6. Andrew Powell & Pilar Tavella, 2012. "Capital Inflow Surges in Emerging Economies: How Worried Should LAC Be?," Research Department Publications 4782, Inter-American Development Bank, Research Department.
    7. Julian di Giovanni & Şebnem Kalemli-Özcan & Mehmet Fatih Ulu & Yusuf Soner Baskaya, 2022. "International Spillovers and Local Credit Cycles [Exchange Rate Dynamics and Monetary Spillovers with Imperfect Financial Markets]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(2), pages 733-773.
    8. Avdjiev, Stefan & Gambacorta, Leonardo & Goldberg, Linda S. & Schiaffi, Stefano, 2020. "The shifting drivers of global liquidity," Journal of International Economics, Elsevier, vol. 125(C).
    9. Avdjiev, Stefan & Binder, Stephan & Sousa, Ricardo, 2021. "External debt composition and domestic credit cycles," Journal of International Money and Finance, Elsevier, vol. 115(C).
    10. Maurice Obstfeld, 2021. "Trilemmas and Tradeoffs: Living with Financial Globalization," World Scientific Book Chapters, in: Steven J Davis & Edward S Robinson & Bernard Yeung (ed.), THE ASIAN MONETARY POLICY FORUM Insights for Central Banking, chapter 2, pages 16-84, World Scientific Publishing Co. Pte. Ltd..
    11. Emter, Lorenz, 2023. "Leverage cycles, growth shocks, and sudden stops in capital inflows," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 711-731.
    12. Hartwig, Benny & Meinerding, Christoph & Schüler, Yves S., 2021. "Identifying indicators of systemic risk," Journal of International Economics, Elsevier, vol. 132(C).
    13. Graciela L. Kaminsky, 2019. "Boom-Bust Capital Flow Cycles," NBER Working Papers 25890, National Bureau of Economic Research, Inc.
    14. Alter, Adrian & Elekdag, Selim, 2020. "Emerging market corporate leverage and global financial conditions," Journal of Corporate Finance, Elsevier, vol. 62(C).
    15. Ghosh, Atish R. & Ostry, Jonathan D. & Qureshi, Mahvash S., 2018. "Taming the Tide of Capital Flows: A Policy Guide," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262037165, December.
    16. Valentina Bruno & Hyun Song Shin, 2014. "Globalization of corporate risk taking," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(7), pages 800-820, September.
    17. Juan José Echavarría & Andrés González, 2012. "Choques internacionales reales y financieros y su impacto sobre la economía colombiana," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 30(69), pages 14-66, December.
    18. Konopczak, Michal, 2015. "Government debt holdings of non-residents – an analysis of the impact on selected emerging economies’ sovereign risk," MPRA Paper 68597, University Library of Munich, Germany.
    19. Cesa-Bianchi, Ambrogio & Eguren Martin, Fernando & Thwaites, Gregory, 2019. "Foreign booms, domestic busts: The global dimension of banking crises," Journal of Financial Intermediation, Elsevier, vol. 37(C), pages 58-74.
    20. Brunnermeier, Markus & De Gregorio, José & Eichengreen, Barry & El-Erian, Mohamed & Fraga, Arminio & Ito, Takatoshi & Lane, Philip R. & Pisani-Ferry, Jean & Prasad, Eswar & Rajan, Raghuram & Ramos, Ma, 2012. "Banks and cross-border capital flows: challenges and regulatory responses," LSE Research Online Documents on Economics 102439, London School of Economics and Political Science, LSE Library.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2014/010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.