We study the impact of ambiguity on two alternative institutions of financial intermediation in an economy where consumers face uncertain liquidity needs. The ambiguity the consumers experience is modeled by the degree of confidence in their additive beliefs. We analyze the optimal liquidity...

This paper examines the ongoing integration of banks and markets through the blurring of boundaries between them. It considers how this integration affects the raison d'etre of banks and its implications for the future evolution of banks, systemic risk and prudential regulation. Shadow banks, PE...

The discussion around the role of nonbanks and their impact on financial stability is a healthy development. However, the author believes the current debate is filled with a number of misconceptions and omissions that detract from the goals of enhancing market stability and economic growth...

This paper reviews the literature on how the evolution of banks and markets is blurring the distinction between them, and the implications of this for post-crisis regulation of banks and markets. Unanswered research questions are identified

Basically, shadow banking is an original kind of business organization, or better a set of institutions and markets, finalized to disinvest fixed assets and convey them to the financial markets. Nowadays, tackling the subject means penetrating the hard core of financialization. Shadow banking...

Europe's financial structure has become strongly bank-based – far more so than in other economies. We document that an increase in the size of the banking system relative to equity and private bond markets is associated with more systemic risk and lower economic growth, particularly during...

This paper looks at the development and transformation of the People's Republic of China (PRC)'s financial system since the start of economic and financial reforms in 1978. It describes how despite the rapid development of capital markets since the 1990s, the PRC's financial system continues to...

The central problem for financial regulation is reducing systemic risk. Systemic risk is the risk that the failure of one significant institution can cause or significantly contribute to the failure of other significant institutions. This paper addresses the five most important policies for...

There is a growing consensus that the U.S. government programs of bailing out the large financial institutions is deeply flawed, and that there are much better ones available. The programs of the U.S. for the purchase of toxic assets potentially transfer trillions of dollars from the US taxpayer...