Measuring the Systemic Risk of Regional Banks in Japan

I embark to measure the systemic risk of regional banks in Japan through shadow banking using PLS-SEM. Non-parametric PLS-SEM is used for the first time in the context of Japanese banks. I collect indicator-based data from Orbis Bank Focus but do not find all the indicators suggested by theory. Results indicate systemic risk is explained by 12.5% of shadow banking. Regulators need to collect more data regarding shadow banking activities in relation to regional banks. Once more data are available, researchers can explore whether shadow banking has a substantial effect on the systemic risk of regional banks in Japan