financial intermediaries trade in securitised assets. We analyse the responses of aggregate activity, credit supply and credit … institutions affect credit dynamics; high leverage in the shadow banking system makes the economy excessively vulnerable to …

Traditionally, regulation of banks has focused on the riskentailed in bank loans. Loans are typically nontradedassets …. In recent years, another component of bank assetshas become increasingly important: assets actively tradedin the … financial markets.1 These assets form the “tradingbook” of a bank, in contrast to the “banking book,” whichincludes the …