Gennaioli, Nicola; Shleifer, Andrei; Vishny, Robert W. - Institute for Quantitative Social Science, Harvard …
We present a model of shadow banking in which banks originate and trade loans, assemble them into diversified portfolios, and finance these portfolios externally with riskless debt. In this model: outside investor wealth drives the demand for riskless debt and indirectly for securitization, bank...