The Effect of Shadow Banking on the Systemic Risk in a Dynamic Complex Interbank Network System

Fan, Hong; Pan, Hongjie

doi:10.1155/2020/3951892

Cited by 4 publications

(3 citation statements)

References 32 publications

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“…This reduces the time and costs required to conduct audits that cover all operational aspects without clear priorities. Additionally, risk-based audits help identify inefficiencies in business processes and internal controls, thereby enabling management to take appropriate corrective actions to improve operational performance (Fan & Pan, 2020).…”

Section: Increased Operational Efficiency and Effectivenessmentioning

confidence: 99%

Analysis of the Role of Risk Based Audit in Banking

Tuti Dharmawati,

Wa Ode Muhardiana,

Ayu Puspita Rini

et al. 2024

JIMR

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Risk based audit (RBA) is an approach that is increasingly being applied in the banking sector to increase the effectiveness of risk management and compliance with regulations. This approach helps banks identify high-risk areas and prioritize audits according to the level of risk. This research uses qualitative methods with a literature research approach. Data sources consist of scientific journal articles, books, reports and documents related to risk-based and banking audits. Research findings show that the RBA has several key roles in improving banking performance. First, RBA improves operational efficiency and effectiveness by focusing audits on high-risk areas. Second, the RBA enables banks to proactively identify and manage risks, thereby strengthening financial and operational stability. Third, the RBA ensures that banks are more compliant with regulations and industry standards, reducing the risk of sanctions and fines. In addition, the implementation of RBA encourages the formation of a strong risk management culture and the use of information technology to support the risk management process. Risk based audit plays a significant role in improving banking performance. By improving operational efficiency, managing risk proactively, ensuring regulatory compliance, establishing a strong risk management culture, and leveraging technology, banks can achieve stability and better performance in the long term. These findings support the importance of implementing RBA as the main strategy in risk management and supervision in the banking sector.

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Section: Increased Operational Efficiency and Effectivenessmentioning

confidence: 99%

Analysis of the Role of Risk Based Audit in Banking

Tuti Dharmawati,

Wa Ode Muhardiana,

Ayu Puspita Rini

et al. 2024

JIMR

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“…Shadow banking business of non-financial enterprises will inevitably exacerbate the trend of industrial hollowing out, and strengthen the cross-contagion effect between enterprise sectors and between enterprise sectors and financial markets. The existence of shadow banking will increase in systemic risk ( Liang, 2016 ; Fan and Pan, 2020 ; Pan and Fan, 2020 ). CEOs who have worked in financial institutions are more financially sophisticated ( Custodio and Metzger, 2014 ) and can endure greater investment risks, navigate more complex investment environments, and manage more diverse investment projects.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

CEOs’ Financial Background and Non-financial Enterprises’ Shadow Banking Business

Yang

Shen

2022

Front. Psychol.

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In recent years, the “financial-like” behavior of non-financial enterprises has contributed to the “off real to virtual,” which has seriously restricted the virtuous cycle of finance and economy. This study selects non-financial enterprises listed on Chinese A-shares from 2008 to 2019 as the research sample, and empirically analyzes the impact of CEOs’ financial background (FB) on the shadow banking business of non-financial enterprises and its mechanism. The results show that: (1) CEOs’ FB has a positive effect on shadow banking business of non-financial enterprises; among which, the positive effect generated by non-banking FB is stronger. The conclusions still hold after robustness tests by replacing the measurement of variables, controlling for other shocks, changing the parameter estimation method, and considering the endogeneity problem. (2) The mechanism analysis reveals the positive effect mainly by reducing the level of entity investment by enterprises. (3) The heterogeneity analysis finds that, on the one hand, with respect to the internal micro characteristics of enterprises, the positive effect is more significant in state-owned enterprises, non-manufacturing enterprises, and non-growth stage enterprises. On the other hand, with respect to the external macro environment, the positive effect is more significant in periods of easy monetary policy, in industries with a higher competition or in regions with a better institutional environment. This study reveals the intrinsic mechanism of CEOs’ FB and non-financial enterprises’ shadow banking business, enriches the study of the influencing factors of non-financial enterprises’ shadow banking business, and provides micro-level empirical support to alleviate the “off real to virtual” of the economy.

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“…Shadow banking activities enhance further opacity in the financial intermediation process and add extra fragility to the overall financial system. They, therefore, accelerate SR, add propensity and assailability in the financial system (Fan & Pan, 2020). Globally, in recent years, the activities of SBs have increased manifold thereby bringing a higher level of SR into the economies.…”

Section: Introductionmentioning

confidence: 99%

Exploring Systemic Risk Measurement Issues in Shadow Banks: A Case of an Emerging Economy

Bhattacharjee

Pati

2022

South Asian Journal of Macroeconomics and Public Finance

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The development of shadow banks, their exaggerated growth rate and the activities outside the regulatory purview gained prominence. Their activities have the ability to disrupt financial stability. India is one of the countries that has registered the highest growth rate. Therefore, the article attempts to identify the SBs that can threaten the economy by applying market-based measures, applying both traditional and modern approaches. The analysis is based on 11 years of the daily stock return of the companies listed on the National Stock Exchange. The risk emitters in the study period are identified along with the directionality of the risk that can lead to a spill over effect in an economy. Also, the various measurement approaches applied in the study are compared and found that conventional measures underestimate the risk that adds up to the leverage and can pose a greater risk in times of the systemic event. These findings have better implications as informed decisions can be taken by the investors, and the regulators can take preventive steps to curb financial instability. JEL Classifications: G230, F650, G01

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The Effect of Shadow Banking on the Systemic Risk in a Dynamic Complex Interbank Network System

Cited by 4 publications

References 32 publications

Analysis of the Role of Risk Based Audit in Banking

Analysis of the Role of Risk Based Audit in Banking

CEOs’ Financial Background and Non-financial Enterprises’ Shadow Banking Business

Exploring Systemic Risk Measurement Issues in Shadow Banks: A Case of an Emerging Economy

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