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Playing the Shadowy World of Emerging Market Shadow Banking

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  • Michael, Bryane

Abstract

For emerging market regulators, shadow banking represents an activity which they must control. For businessmen in economies like Russia, Argentina, Saudi Arabia and Mexico, shadow banking represents an important business opportunity. By extending credit to risky (but promising) activities through shadow banking, financiers in these economies can earn far higher returns for excess-cash than placing it in cash management accounts. In this brief, we describe ways that cash-rich individuals and companies can use shadow banking activities to help themselves (by earning more money) and help the economy (by extending credit in these traditionally credit-starved economies). Some of these activities include issuing debt which shadow bankers use as collateral, chopping project-lending into privately-placed share offerings, investing in trade, real estate and insurance securities as well as centring shadow banking activities in regulation-friendly jurisdictions.

Suggested Citation

  • Michael, Bryane, 2014. "Playing the Shadowy World of Emerging Market Shadow Banking," EconStor Preprints 108996, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:108996
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    File URL: https://www.econstor.eu/bitstream/10419/108996/1/Shadow%20Banking%20Brief2.pdf
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    Cited by:

    1. Du, Julan & Li, Chang & Wang, Yongqin, 2017. "A comparative study of shadow banking activities of non-financial firms in transition economies," China Economic Review, Elsevier, vol. 46(S), pages 35-49.

    More about this item

    Keywords

    shadow banking; financial services; emerging markets; securitization;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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