Societies develop ways of making decisions regarding collective problems, thereby creating norms, rules, and institutions; this is what governance is about. In policy research, governance has become an important focus of attention; but debates show a lack of clarity at the conceptual level and a...

"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...