Gennaioli, Nicola; Shleifer, Andrei; Vishny, Robert W. - 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 … expectations, the shadow banking system is stable and improves welfare. When investors and intermediaries neglect tail risks …