Shleifer, Andrei; Gennaioli, Nicola; Vishny, Robert W. - National Bureau of Economic Research (NBER) - 2011
We present a model of shadow banking in which financial intermediaries originate and trade loans, assemble these loans into diversified portfolios, and then finance these portfolios externally with riskless debt. In this model: i) outside investor wealth drives the demand for riskless debt and...