The conventional view is that microeconomic reforms after the 1997-98 Asian financial crisis have greatly strengthened banking systems in Asia. Banks have become better capitalised, external exposures have been reduced and credit risk has been managed more effectively. But this conventional view...

The so-called “shadow banking” system arose over recent decades and achieved full bloom just prior to the recent financial crisis. That system proved unstable. And the shadow banking system was the central focus of the government's emergency policy response to the crisis. Drawing on existing...

This is one of three lectures I am giving in December 2012 at universities and government agencies in Shanghai and Beijing. In the context of comparing Western and Chinese shadow banking concerns and regulatory responses, this lecture addresses three broad questions: What is shadow banking...

The 2007-2010 financial crisis highlighted the central role of financial intermediaries' stability in buttressing a smooth transmission of credit to borrowers. While results from the years prior to the crisis often cast doubts on the strength of the bank lending channel, recent evidence shows...

This paper attempts to reconcile the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity. On the one hand, the empirical growth literature finds a positive effect of financial depth as measured by, for instance, private...

"Loayza and Rancire study the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity. On the one hand, the empirical growth literature finds a positive effect of financial depth as measured by, for instance, private domestic...

We study the effects of shadow banking panics in a macroeconomic model with a rich financial system, including deposit-financed retail banks and wholesale-financed shadow banks. The model can quantitatively match the dynamics of key variables around the US financial crisis. Wholesale funding...