What is Shadow Banking?
Electronic Access:
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Summary:
There is much confusion about what shadow banking is. Some equate it with securitization, others with non-traditional bank activities, and yet others with non-bank lending. Regardless, most think of shadow banking as activities that can create systemic risk. This paper proposes to describe shadow banking as “all financial activities, except traditional banking, which require a private or public backstop to operate”. Backstops can come in the form of franchise value of a bank or insurance company, or in the form of a government guarantee. The need for a backstop is in our view a crucial feature of shadow banking, which distinguishes it from the “usual” intermediated capital market activities, such as custodians, hedge funds, leasing companies, etc.
Series:
Working Paper No. 2014/025
Subject:
Asset and liability management Banking Capital markets Financial markets Financial sector policy and analysis Financial services Government liabilities Liquidity Public financial management (PFM) Shadow banking Systemic risk
English
Publication Date:
February 11, 2014
ISBN/ISSN:
9781475597349/1018-5941
Stock No:
WPIEA2014025
Pages:
9
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