Bank holding companies (BHCs) invest in risky projects through bank entities or sell projects for a fee, thus engaging in shadow banking. BHCs can increase their fee income by guaranteeing sold projects with a recourse to the bank's balance sheet. If bank bailouts are likely and for high capital...

The paper focuses on two functions of shadow banking: securitization and collateral intermediation. It describes operations of the shadow banking system, demand factors, systemic risks, and associated policy priorities

China's shadow banking has been rising rapidly in the last decade, mainly driven by regulations for banks, the Fiscal Stimulus Plan in 2008, and credit constraints in restrictive industries. This sector has continued growing although the regulators repeatedly attempted to impose new regulations...

I present empirical evidence that shadow banks weaken the pass through of monetary policy tothe real economy by weakening the bank lending channel. I construct a novel dataset of home mortgage loan originations from the Home Mortgage Disclosure Act (HMDA) matched with county level home prices...

Shadow banking is the creation or transfer – by banks and non-bank intermediaries – of bank-like risks outside the banking system. In Italy the shadow banking system is fully regulated, mostly following the principle of same business-same rules or ‘bank-equivalent regulation'. After an...

We present a model in which shadow banking arises endogenously and undermines market discipline on traditional banks. Demandable deposits impose market discipline: Without shadow banking, traditional banks optimally pursue a safe portfolio strategy to prevent early withdrawals. Shadow banking...

We provide a novel interpretation of shadow banking in China from the perspective of dual-track interest rate liberalization. Shadow banking leads to a Kaldor-Hicks improvement, if the gains from reducing the capital idleness and financing the more productive private enterprise (PE) outweigh the...

We analyze the effect of bank capital requirements on the structure and risk of a financial system where markets, regulated banks, and shadow banks coexist. Banks face a moral hazard problem in screening entrepreneurs' projects, and they choose whether to be regulated or not. If regulated, a...

Bank holding companies invest in risky projects through regulated bank entities and sell projects for a fee, thus engaging in shadow banking. To increase the fee income, BHCs guarantee sold projects with bank proceeds. When demand for financial assets is high, BHCs expand their own bank...