findings also suggest that non-bank banks have tended to take positions in riskier assets (particularly in equities). In line … incentives. Concurrently, the tightened regulatory framework, in particular for banks, increases the comparative attractiveness … of the less regulated, so-called shadow banking sector. Employing flow-of-funds data for the Euro Area's non-bank banking …

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 …-taking with early liquidation in times of crisis. In equilibrium, shadow banks expand until their liquidation causes a fire …

We present a model in which shadow banking arises endogenously and undermines marketdiscipline on traditional banks …. Depositors' ability to re-optimize in response to crisesimposes market discipline on traditional banks: these banks optimally … on the 2008 financial crisis in theUnited States, during which shadow banks experienced a sudden dry-up of funding …

franchise value, price-drop and recapitalization channels. The speed of entry of new banks after a collapse has a stabilizing …