Banks, Shadow Banking, and Fragility

Luck, Stephan; Schempp, Paul

doi:10.2139/ssrn.2479948

Cited by 32 publications

(5 citation statements)

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“…In recent years, shadow banking has been one of the ongoing issues for researchers. Only a few studies in the literature discuss this topic, and they mainly focus on shadow banking activities at the macroeconomic level (Adrian, 2014;Luck & Schempp, 2014;Bengtsson, 2013;Pozsar et al, 2010). While the current literature has mostly concentrated on the off-balance sheet of financial institutions (Adrian & Shin, 2009;Nelson et al, 2018;Tang & Wang, 2016;Zhang et al, 2023), our study fills the gap in the shadow banking literature based on the view of nonfinancial firms, especially in the Vietnam context -a transition economy.…”

Section: Conclusion and Recommendationmentioning

confidence: 95%

“…In recent years, shadow banking activities have been one of the topics of interest to researchers. Many researchers have found a relationship between shadow banking and the fragility and instability of the financial system (Adrian, 2014;Luck & Schempp, 2014;Bengtsson, 2013;Pozsar et al, 2010). Others tried to develop models to measure the size of and monitor shadow banking activities at the macroeconomic level.…”

Section: Introductionmentioning

confidence: 99%

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The impact of shadow banking on nonfinancial firms listed on the Ho Chi Minh Stock Exchange (HOSE) – Evidence from Vietnam

Le,

Nguyen Thi Kim,

Hoang Dieu

2024

JEECAR

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This paper examines the effect of shadow banking activities on the performance and risk-taking of 339 Vietnamese nonfinancial firms listed on the Ho Chi Minh Stock Exchange (HOSE). Using manually gathered data on firms' shadow banking activities from 2009 to 2021, the expansion of shadow banking is found to have a negative effect on the overall financial soundness of the securities companies, in particular negatively affecting performance and increasing the risk tolerance of companies. We present empirical findings about several aspects of shadow banking activities, including entrusted loans, entrusted investments, private lending, leasing, and commercial credit in this study. While the majority of shadow banking operations could have a negative impact on a firm's performance, we have discovered that commercial credit grants were crucial in reducing the COVID-19 pandemic's adverse effects on businesses, highlighting the need for financial stability in times of crisis. According to our results, the risk of shadow banking activities, which have consequences for policymakers and caution for nonfinancial enterprises, must be taken into consideration.

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Section: Conclusion and Recommendationmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

The impact of shadow banking on nonfinancial firms listed on the Ho Chi Minh Stock Exchange (HOSE) – Evidence from Vietnam

Le,

Nguyen Thi Kim,

Hoang Dieu

2024

JEECAR

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“…Luck (2014) pointed out that the stability of shadow banking is closely related to its size [10]. The size of core shadow banking includes entrusted loans, trust loans and undiscounted banker's acceptance bills, according to the Moody's Rating Agency's calculation.…”

Section: The Scale Measurement Of Shadow Banking In Chinamentioning

confidence: 99%

Shadow Banking: A Study Based on Mechanism, Risk and Supervision

2021

IJFS

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Since the outbreak of the financial crisis in the United States in 2008, "shadow banking" has attracted extensive attention of scholars at home and abroad. Based on the definition of shadow banking at home and abroad, this paper clarifies the mechanism of shadow banking in China, and finds that its business model is constantly changing with the introduction of regulatory policies. Secondly, it analyzes the credit risk and liquidity risk of shadow banking, and calculates its scale. This paper describes the risk situation of shadow banking in China from the perspective of theory and data. Finally, this paper analyzes the regulatory difficulties of shadow banking in China from three aspects of capital source, intermediate channel and capital destination, so as to reflect the regulatory status of shadow banking in China and give corresponding suggestions.

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“…Other papers provide microfoundations for the role of shadow banks in more stylized, theoretical models, e.g. Gennaioli, Shleifer, and Vishny (2013), Luck and Schempp (2016), Moreira and Savov (2017) and Chretien and Lyonnet (2017). Farhi and Tirole (2017) provide a theoretical model of optimal macroprudential regulation in the presence of shadow banks.…”

Section: Introductionmentioning

confidence: 99%

The Macroeconomic Effects of Shadow Banking Panics

Poeschl

2023

The B.E. Journal of Macroeconomics

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We study the interaction between occasionally binding financial constraints in the traditional (retail) banking sector and banking panics in the shadow banking sector. Shadow banking panics occur when retail banks choose not to roll over their lending to shadow banks. Occasionally binding financial constraints of retail banks increase the likelihood of and amplify boom-bust dynamics around such shadow banking panics. The model can quantitatively match the dynamics of macroeconomic and financial variables around the US financial crisis. We quantify the impact of wholesale funding market interventions akin to those implemented by the Federal Reserve in 2008, finding that they reduced the fall in output by about half a percentage point. The timing of this intervention matters: an intervention before the banking panic would have been more effective and might even have avoided the panic.

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Banks, Shadow Banking, and Fragility

Cited by 32 publications

References 0 publications

The impact of shadow banking on nonfinancial firms listed on the Ho Chi Minh Stock Exchange (HOSE) – Evidence from Vietnam

The impact of shadow banking on nonfinancial firms listed on the Ho Chi Minh Stock Exchange (HOSE) – Evidence from Vietnam

Shadow Banking: A Study Based on Mechanism, Risk and Supervision

The Macroeconomic Effects of Shadow Banking Panics

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