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Understanding the risks inherent in shadow banking: a primer and practical lessons learned

Author

Listed:
  • David Luttrell
  • Harvey Rosenblum
  • Jackson Thies

Abstract

Examinations of the 2007?09 financial crisis often use the term shadow banking. This paper explains the form and functioning of the shadow banking system, how it relates to systemic risk and the recent financial crisis, and what particular aspects should be highlighted to benefit policymakers as they implement new regulations designed to enhance financial market resiliency. The paper is divided into two parts: The first serves as a primer on shadow banking; the second provides a narrative of how the system froze during the financial crisis and pertinent lessons learned for the current reform effort.

Suggested Citation

  • David Luttrell & Harvey Rosenblum & Jackson Thies, 2012. "Understanding the risks inherent in shadow banking: a primer and practical lessons learned," Staff Papers, Federal Reserve Bank of Dallas, issue Nov.
  • Handle: RePEc:fip:feddst:y:2012:i:nov:n:18
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    File URL: http://www.dallasfed.org/assets/documents/research/staff/staff1203.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Krug, Sebastian & Wohltmann, Hans-Werner, 2016. "Shadow banking, financial regulation and animal spirits: An ACE approach," Economics Working Papers 2016-08, Christian-Albrechts-University of Kiel, Department of Economics.
    2. SungJun Kim, 2017. "What drives shadow banking? A dynamic panel evidence," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Statistical implications of the new financial landscape, volume 43, Bank for International Settlements.
    3. Tyler Atkinson & David Luttrell & Harvey Rosenblum, 2013. "How bad was it? The costs and consequences of the 2007–09 financial crisis," Staff Papers, Federal Reserve Bank of Dallas, issue Jul.
    4. Karl Michael Beyer & Lars Braeutigam, 2016. "Das europaeische Schattenbankensystem: Typologisierung und die Bewertung regulatorischer Initiativen auf europaeischer Ebene," ICAE Working Papers 56, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    5. 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).
    6. Nicholas Borst, 2013. "Shadow Deposits as a Source of Financial Instability: Lessons from the American Experience for China," Policy Briefs PB13-14, Peterson Institute for International Economics.
    7. Calimani, Susanna & Hałaj, Grzegorz & Żochowski, Dawid, 2017. "Simulating fire-sales in a banking and shadow banking system," ESRB Working Paper Series 46, European Systemic Risk Board.
    8. Ross P. Buckley & Douglas W. Arner & Michael Panton, 2014. "Financial innovation and development in East Asia: balancing risks and opportunities," Chapters, in: Iwan J. Azis & Hyun S. Shin (ed.), Global Shock, Risks, and Asian Financial Reform, chapter 7, pages 246-283, Edward Elgar Publishing.
    9. Calimani, Susanna & Hałaj, Grzegorz & Żochowski, Dawid, 2020. "Simulating fire sales in a system of banks and asset managers," Working Paper Series 2373, European Central Bank.
    10. Lars Bräutigam & Karl Michael Beyer, 2016. "Das europäische Schattenbankensystem," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 154, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.

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