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By studying the relationship between shadow banking activities of commercial banks in China and the pricing of deposits and loan interest rates, we find that shadow banking promotes the liberalization of commercial bank interest rate pricing. Further research finds commercial banks' shadow banking businesses improve their liquidity. Compared with state-owned banks, the development of shadow banking promotes the liberalization of the deposit and loan interest rate pricing of non-state-owned banks to a greater extent. Therefore, we believe China should support the development of shadow banking to promote the liberalization of interest rates and monetary policy transformation. [ABSTRACT FROM AUTHOR]

This paper investigates the driving forces of shadow banking in 27 EU Member States, using annual data for 1999–2020. To account for heterogeneity, the panel is split into two sub-groups labeled "old" Europe and Eastern Europe. The estimations provide evidence that bank assets, insurance corporation assets, interest rate spreads, and regulatory quality significantly determine shadow banking growth. Financial development also has a considerable influence. The strong link between shadow banking entities and insurance corporations highlights the need to create a framework to test the interconnectedness of financial institutions at the EU level. [ABSTRACT FROM AUTHOR]

This article studies the effects of higher bank capital requirements. Using new firm-lender matched credit data from South Korea, we document that Basel III coincided with a 25% decline in credit from regulated banks, and an increase of similar magnitude from non-bank (shadow) lenders. We use our data to estimate the effect of capital requirements on bank credit, and the spillover effect of the reform on non-bank lending. We then build a general equilibrium model with heterogeneous banks and firms that replicates these micro estimates. We find that Basel III can account for most of the observed decrease in regulated bank lending and about three quarters of the increase in shadow lending. The latter is driven exclusively by general equilibrium effects of the reform. [ABSTRACT FROM AUTHOR]

The research objective is defined as the identification and confirmation of empirical relationships between shadow banking activities and economic development in developing and transitional economies to establish a theoretical basis for minimizing potential risks associated with shadow banking. The methodological design is based on a quantitative approach, implemented through correlation-regression analysis and ARIMA forecasting methods. The research findings confirm Hypothesis 1: China's shadow banking is closely interconnected with the country's economic development. However, Hypothesis 2 (the reduction of shadow banking in China contributes to per capita GDP growth) is only supported for specific structural elements of shadow banking that contribute to economic overheating. In contrast, for other structural elements, such as entrusted loans, a strong direct correlation exists, promoting a positive impact of shadow banking on the country's economic development. This highlights the need for a highly balanced state policy to minimize shadow banking risks. The research results can be valuable for professionals in public administration and academic researchers, particularly in terms of shaping future research directions. [ABSTRACT FROM AUTHOR]

The European Green Deal and similar strategies seek to improve sustainability of the agricultural sector via public support programmes. It is important to assess the costs of sustainable energy use in agriculture by exploiting the shadow price approach. However, the earlier literature often ignored the fact that shadow price analysis may be sensitive to the assumed direction of optimization. This paper seeks to disentangle the major patterns in energy-related greenhouse gas (GHG) emission performance in the selected European Union countries by assuming different optimization directions. The country-level data are used to construct the environmental production technology by means of the data envelopment analysis. The different directional output distance functions (aggregate, unit and radial) for the weak disposability data envelopment analysis models are used to quantify the shadow prices of the energy-relevant GHG emission and construct the marginal abatement cost curves. The results indicate spatial and temporal variation in the environmental performance that can be addressed by adjusting the support programmes. [ABSTRACT FROM AUTHOR]

This paper applies causal machine learning methods to analyze the heterogeneous regional impacts of monetary policy in China. The methods uncover the heterogeneous monetary policy impacts on the provincial figures for real GDP growth, CPI inflation, and loan growth compared to the national averages. The varying effects of expansionary and contractionary monetary policy phases on Chinese provinces are highlighted and explained. Subsequently, applying interpretable machine learning, the empirical results show that the credit channel is the main channel affecting the regional impacts of monetary policy. An imminent conclusion of the uneven provincial responses to the "one-size-fits-all" monetary policy is that different policymakers should coordinate their efforts to search for the optimal fiscal and monetary policy mix. [ABSTRACT FROM AUTHOR]

In this article we analyze the Hungarian shadow banking system. We point out that the Hungarian shadow banking system is not only much less developed than that of the EU's developed countries, but also structurally different. A further specific feature of the Hungarian financial system is what we call the secondary shadow banking system, through which foreign shadow banking funds do not finance the domestic banking system directly, but through foreign interbank funds and related cross currency basis swaps. The aim of our analysis is to explore the reasons for these specificities, to analyze the risks of the Hungarian shadow banking, and secondary shadow banking systems, and to show that the interconnectedness between banking and shadow banking may not only occur through direct exposure, but also indirectly through the presence of secondary shadow banking. [ABSTRACT FROM AUTHOR]

Non-banking finance companies (NBFCs) have had a rather unpredictable presence, survival and growth in the Indian financial markets. It is rather well known by now that the risk-borne activities undertaken by a few NBFCs raised a few red flags and brought many stable heavyweight organizations in the finance sector to a screeching halt in their tracks. Due to the recent IL&FS and the DHFL crises, one might easily conclude to restrict, restrain and rein in the NBFC sector with increased regulations. Clamping down on the NBFC sector would not work, as they reach out to the nook and corner of the country, with many citizens seeking services from the NBFC sector, especially when they do not find a suitable solution to their credit needs from the formal banking sector. The authors find that some of the basic challenges for the NBFC sector have always been, and shall always remain, to find an ideal mix of capital from varied sources to fund the growing credit demand while being devoid of excessive risk from any one set of lenders. Towards the end of this paper, upcoming challenges for the NBFC sector domestically as well as globally along with its most suitable solutions from a practical implementation perspective have been suggested. [ABSTRACT FROM AUTHOR]

This paper investigates the influence of non-financial firms' involvement in shadow banking on the caliber of corporate innovation. It focuses on Chinese non-financial listed companies between 2012 and 2022 and delves deeper into the mechanism of economic policy uncertainty (EPU) in relation to the interplay between shadow banking and innovation quality. The findings reveal that firms participating in shadow banking activities experience a decline in innovation quality, with a more pronounced effect observed among state-owned enterprises (SOEs) and small and medium-sized enterprises (SMEs). Furthermore, EPU amplifies the negative impact of non-financial firms' shadow banking on innovation quality. The outcomes of this study hold significant academic value and practical implications for curbing enterprise shadow banking, optimizing resource allocation structures, maintaining economic policy stability, and fostering high-quality businesses development. Plain language summary: How non-financial companies' secret loans affect their ability to innovate when economic policies are unstable This research looks into how non-financial companies that do secret or unofficial banking (called shadow banking) affect their ability to create new and better products or services (known as innovation quality). It mainly focuses on Chinese non-financial companies listed on the stock market between 2012 and 2022. The study also explores how changes in economic policies (economic policy uncertainty, or EPU) connect to shadow banking and innovation quality. The results show that companies involved in shadow banking often see a drop in their innovation quality. This effect is stronger in companies owned by the government (state-owned enterprises, or SOEs) and in smaller businesses (small and medium-sized enterprises, or SMEs). Moreover, when economic policies are uncertain, shadow banking's negative effects on innovation become worse. This study is important for understanding how to limit shadow banking, use resources more efficiently, keep economic policies stable, and help businesses develop better. [ABSTRACT FROM AUTHOR]

This article develops a macroeconomic model of interaction between the real sector and the financial sector, and explores the conditions that make the economy vulnerable to sudden collapse as a result of finance-led growth. It extends the Kaleckian framework of the link between profit and investment in a modern financialized economy with some specific features of shadow banking and articulates the underlying dynamics that render the economy systemically fragile and vulnerable to abrupt crashes. We elaborate on this link through a stock-flow consistent accounting framework and study the dynamics through two interacting forces of the shadow banking sector: profit-seeking and liquidity preference. The article formally articulates the dynamics through the framework of 'cusp catastrophe' and identifies some early warning signs of potential financial collapse. [ABSTRACT FROM AUTHOR]

There is no risk-free way to engage in bank-like activities. Entities that take deposits, transmit money, or otherwise provide custody of funds all generally engage in maturity transformation, a process that turns short-term debts into longer-term investments. Maturity transformation is inherently dangerous. Firms that engage in these activities also face moral hazard, whereby they may act contrary to their customers' interests. Without government intervention and a backstop, institutions that engage in these activities are liable to run, harming their customers. For that reason, the government heavily regulates bank, serves as their lender of last resort, and provides their depositors with insurance. Scholars have long been wary of "shadow banks:" nonbanks that perform bank-like activities without the guardrails that protect bank depositors. Shadow banks are not just limited to the largest financial institutions, like those that helped exacerbate the great financial crisis. Retail consumers send and receive payments with P2P platforms, purchase and hold stablecoins, and make deposits in crypto and imitation banks--all of which require maturity transformation--without understanding these institutions' inherent instability and the risks of loss that they pose. Although consumers have seen runs, deposit insurance means they have likely never been harmed by one, and they do not understand the differences between their banks and the "consumer shadow banks" that perform the same or similar functions. In this paper, we argue that consumer shadow banks can be "abusive" and should be regulated by the Consumer Financial Protection Bureau (CFPB). Accordingly, we urge the CFPB to enact regulations providing minimum standards for their provision, including capital, liquidity, lending limits and limits on extending credit to insiders, safety and soundness standards, and stress testing where appropriate, and subject these firms to supervision. [ABSTRACT FROM AUTHOR]

This study aims to analyze the effect of banking stability, exchange rates, and external debt on economic growth in BRICS countries (Brazil, Russia, India, China, and South Africa) during the period 2011-2020. The data used in this study is panel data from five BRICS countries, obtained from the International Monetary Fund (IMF) and the World Bank. The method used is a panel data regression model using the Fixed Effect method. This model makes it possible to account for the fixed effects of time as well as the fixed effects of individual states in regression analysis. The results of the analysis show that banking stability has a significant negative influence on economic growth in BRICS countries. On the other hand, exchange rates and external debt have a significant positive impact on economic growth. These findings indicate that policies that promote banking stability, prudent exchange rate management, and effective use of external debt can support sustainable economic growth in BRICS countries. The results of the analysis show that banking stability has a significant negative influence on economic growth in BRICS countries. On the other hand, exchange rates and external debt have a significant positive impact on economic growth. These findings indicate that policies that promote banking stability, prudent exchange rate management, and effective use of external debt can support sustainable economic growth in BRICS countries. [ABSTRACT FROM AUTHOR]

Money is a motley. While the state enjoys a monopoly on issuing new physical currency, a variety of instruments serve money-like roles in the financial system. The commercial banking system significantly augments the money supply through issuing deposits. Alongside it, a shadow banking system has also developed, offering a range of deposit substitutes. This Article seeks to cast new light on the U.S. financial system by exploring how, over the course of the twentieth century, federal policymakers engaged in a series of distinct and largely uncoordinated monetary experiments. As we show through historical case studies, federal authorities designed, promoted, and repurposed financial instruments, endowing them with money-like characteristics by providing them with liquidity support, credit support, or both. In essence, policymakers created special purpose moneys to further national policy ambitions. The result of each intervention was a debt instrument with monetary properties. Market participants understood, in part due to these instruments’ implicit federal guarantees, that they would be rapidly convertible into base money under a wide range of circumstances. In short, the market treated these instruments as money substitutes. Yet the creation and use of these instruments was not coordinated and controlled by the United States’ central bank and formal monetary authority, the Federal Reserve, nor was it subject to the same level of scrutiny and supervision as the banking system. Almost invariably, these special purpose monies proved less visible than traditional monetary policy. Hence our description of it as a kind of submerged or “hidden monetary state.” This historical account enriches our understanding of the costs and benefits of such approaches. As a normative matter, we show how pursuing public ends by means of special money creation is generally more complex, less visible, and more regressive than most monetary policy. We also show, however, that these policies have led to important public benefits that are not always recognized. These relate to the international role of the dollar and the functioning of the U.S. Treasury and mortgage markets. As a policy matter, our account helps clarify how shadow banking emerged in ways that can inform policy making. In particular, crypto assets present many of the same challenges that policymakers faced in the 1960s and 1970s. We also link shadow banking to broader debates about the nature of the state and public policy. [ABSTRACT FROM AUTHOR]

Rising housing prices in China present a significant risk to financial and economic stability. Our study investigates this "gray rhino" risk by analyzing the financial shock transmission network, using a novel high-dimensional network approach applied to data from 45 real estate firms and 15 banks from 2011 to 2023. We discover that the network's connectedness is predominantly short-term and internal to each sector, with weaker inter-sectoral links. Key macroeconomic indicators, notably monetary policy uncertainty, and inflation, significantly drive this connectedness. Our results indicate that, despite concerns, China's real estate risk remains within manageable bounds, offering critical insights for market stakeholders. [ABSTRACT FROM AUTHOR]

Employing the exogenous scenario of the “New Rules on Asset Management” in April 2018, this paper tries to explore the impact of the contraction of Chinese shadow banking on corporate investment behavior. This paper finds that the regulation leads to a 18.3% decrease in capital expenditure for firms relying on shadow banking system prior to the shock. Then, this paper tests three underlying mechanisms, which include the decrease of corporate borrowing, the increase of corporate financing constraints and the reduction of debt maturity. This paper also provides the empirical evidence that the implementation of the “New Rules on Asset Management” optimizes the allocation of capital across firms. [ABSTRACT FROM AUTHOR]

Objective: Shadow banking comprises a set of non-bank financial intermediaries such as pension funds, investment funds, insurance companies, and other non-bank financial intermediaries that function similarly to traditional banks in terms of performance but are not supervised by the central bank. Given the expansion of shadow banking activities and its impact on real sectors of the economy, this research aims to investigate the effect of shadow banking on the size of government in selected countries (including two groups of developed and developing countries). Methods: This research was conducted using the Panel Vector Autoregression (VAR) model over the period 2002-2022 in selected countries. Results: The results obtained for the group of developed countries indicate that the expansion of shadow banking assets has not led to an increase in the size of government. However, conversely, according to the research findings for the group of developing countries, there is a positive relationship between shadow banking and the size of government. That is, the expansion of shadow banking assets in the group of developing countries has resulted in an increase in the size of government. Conclusions In this study, the impact of shadow banking on the size of government in selected countries has been examined using the Panel VAR model. The results indicate that the expansion of shadow banking assets in developed countries has not led to an increase in the size of government. However, conversely, in developing countries, the expansion of shadow banking assets has led to an increase in the size of government. [ABSTRACT FROM AUTHOR]

Amid the emerging dominance of nonbanks, small banks use key financing advantages to persist in the mortgage market. We provide evidence of the heterogeneous impact of two shocks to the supply of mortgage credit: postcrisis regulatory burden and GSE financing cost changes. Small banks exploit regulation disproportionately affecting the largest four banks (Big4) and their ability to lend on balance sheet to strongly substitute for the retreating Big4. The erasure of guarantee fee (g-fee) discounts for large lenders facilitates small bank growth in GSE lending. Small banks also grow balance sheet loans in areas more exposed to g-fee hikes. [ABSTRACT FROM AUTHOR]

Despite occasional shocks, tourism, as one of the world’s largest industries, has undergone rapid evolution in the last decades. Nonetheless, the industry has been shocked by the recent COVID-19 outbreak, and it is still unclear how the tourist psyche has changed and what the aftermath will be. This study presents an innovative explicit-implicit approach to examine how the pandemic-induced (re)connection with nature influences travel and destination choices. Based on the findings, respondents explicitly and implicitly reported a favourable perception of natural destinations amid the pandemic. Consequently, the author can observe an increase in the popularity of natural sites, along with a corresponding surge in the frequency of nature visits, particularly among women and individuals with less committed or no relationships. Key values were identified as the driving forces behind this trend, including serenity, uniqueness, safety, closeness, and discovery, which can be considered crucial factors in shaping the future of sustainable tourism. [ABSTRACT FROM AUTHOR]

This study investigates the impact of institutional quality and banking competition on shadow economy for 127 economies for the period of 2005–2017. It further explores if institutional quality/competition shapes the relationship differently between banking competition/institutional quality and shadow economy. This paper uses the system GMM estimator to tackle potential omitted variable bias, endogeneity, and simultaneity issues. The findings suggest that overall, greater competition among banks and stricter institutions in the country reduce the size of shadow economy. Furthermore, impact of competition on shadow economy is even stronger in countries with weak institutions and the impact of institutional quality is greater in lower competitive environment. Only severe competition matters for shadow economy in case of developed countries. To sum up the novel findings of this research, competition and institutions complement each other in reducing the size of shadow economy. These findings are robust to different econometric estimators. The findings carry vital policy implications for the governments and regulators to play their part in reducing the shadow economy. [ABSTRACT FROM AUTHOR]

Banks and financial institutions face various risks. The effective management of these risks plays a vital role in the efficiency and effectiveness of these banks. One of these risks is shadow banking in the financial institutions. This paper conducts the research to discuss the effects of shadow banks on banking risk. The research problem of the paper is how the operations of Iranian state banks affects risk. We analysis this risk with a selection of state banks namely: Agricultural, Housing, Post Bank, Industry and Mining, Sepah, Export Development and Cooperative Development banks from 2016 to 2022. Capital structure, asset quality, liquidity, capital adequacy and banks' size are considered as explanatory and control variables. We used the ratio of off-balance sheet items to total asset, bank claims from subsidiaries and bank investment in securities as the indicators of shadow banking respectively in three models estimation based on Panel Data. The results show that shadow banking, with the three indicators which used, significantly increase the risk, while capital structure offset part of such an effect. In other words, increasing the ratio of off-balance sheet items to assets, bank claims from subsidiaries and bank investment in securities leads to higher risk. However, a perfect capital structure can offset part of increasing effect of shadow banking on the risk. Results also indicate an increase in asset quality, liquidity, and capital adequacy lead to a decrease in the risk, while expansion of banks' size increase the risk. [ABSTRACT FROM AUTHOR]

We exploit the quasi-random assignment of federal bank examiners to syndicated loans to study the effect of supervision on corporate lending. Following supervisory rating downgrades, banks decrease credit commitments and downgrade internal risk assessments. Borrowers face larger commitment reductions whenever banks have low ex ante screening and monitoring incentives or whenever examiners' assessments contain more information than banks' assessments, suggesting that examinations complement bank monitoring. Although public firms can offset the loss of bank credit by tapping external capital markets, smaller and more opaque private firms draw on internal cash balances instead and reduce investment and sales growth. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4854. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of macroprudential policy announcements on financial stability in Europe. Our three financial (in)stability proxies are systemic risk measures that cover all types of financial institutions and consider various financial market segments. We find that the announcements of macroprudential policy actions only contain banking systemic risk with the latter computed based on market data. However, when measuring systemic risk by including both market and balance sheet data, we observe an increase in the systemic risk of all financial institutions, banks and non-banks. This last result is confirmed when considering non-diversifiable risk across financial market segments. [ABSTRACT FROM AUTHOR]

This article tackles the question of whether financialisation is present in the Chinese economy by analysing two key transformations of the country's financial system. The first was a state-led reform process through which the Chinese financial system introduced market practices, similarly to the rest of the economy. The second was a market-led process, reflected in the emergence and rise of shadow banking, which originates from within financial markets with the aim of bypassing loan restrictions. The article shows that despite the two transformations and the enormous growth of finance during the past four decades, the underlying character of the Chinese financial system exhibits remarkable continuity. Namely, it remains bank based – albeit partially liberalised – with a predominant role for bank credit and a strong presence for the state. The relational and government-controlled structures of Chinese finance have not been replaced by arm's length and private mechanisms. On these grounds, it is premature to consider the Chinese economy to be financialised. [ABSTRACT FROM AUTHOR]

The rapid proliferation of information and communication technology has accelerated innovation in financial instruments, resulting in a heightened transformation of the competitive landscape and regulatory framework within the banking sector. Despite ongoing policy debates regarding the role and significance of financial innovation and regulation, there is a scarcity of empirical studies investigating their implications in the context of South Asian Association for Regional Cooperation (SAARC). Therefore, this study seeks to bridge this gap by examining the impact of financial innovation and regulation on bank performance. Specifically, it assesses how financial innovation influences bank performance and how this interaction varies across different aspects of the institutional environment in relation to bank performance. To achieve the objectives of study, we employ panel regression methods, including fixed and random effect models, to analyze a dataset consisting of 88 banks from SAARC countries for the period 2007 to 2019. Our findings reveal a significant positive relationship between financial innovation and banking performance. In addition to this, bank regulation has a moderating role in the relationship between financial innovation and bank performance over the sample period. This indicates that both financial innovation and regulation help to improve the quality and efficiency of banking services. [ABSTRACT FROM AUTHOR]

The U.S. Federal Reserve now controls a part of the money supply, but other financial institutions, called the "shadow" banks, issue a growing amount of the money supply, which remains outside the control of the U.S. Federal Reserve. Being unregulated, these shadow banks operate by offering highly risky amounts of credit, leading to lack of confidence and consequent run on such banks. However, due to competition with the shadow banks, the commercial banks have undergone structural change and are themselves engaged in trading the same financial assets as traded by the shadow banks. Hence the distinction between banks and shadow banks is now moot. Consequently, almost all large financial institutions operate like the shadow banks, and now are heavily engaged in speculative derivative futures trades. The second structural change is that the derivatives market now dominates the prices not only of financial futures but also the prices of all traded commodities, soft and hard, demonstrating oligopolistic market power. The unchecked growth of speculative activity in the futures markets has raised commodity prices and also increased price volatility. This in turn has rendered the entire financial system including the banking system to become unstable, leading to bank runs and financial "bubbles.". [ABSTRACT FROM AUTHOR]

The historical prevalence of banking crises and their profound impact on global economies underscores the imperative for policy makers to refine their crisis forecasting frameworks. Against this backdrop, the present study endeavors to predict potential banking crises in India by leveraging a spectrum of artificial intelligence and machine learning techniques (AI-ML). These techniques encompass logistic regression, random forest, naïve Bayes, gradient boosting, support vector machine, neural networks, K-nearest neighbors, and decision trees. Initially, a banking fragility index was constructed utilizing monthly banking data spanning 2002 to 2023, demarcating the periods of crisis and stability. Subsequently, an extensive array of early warning indicators (EWIs) encompassing asset prices, macroeconomic factors, external influences, and credit-related variables were employed to forecast crisis periods. Our findings reveal that AI-ML models exhibit reasonable accuracy in predicting banking crises. Moreover, advanced model performance metrics highlight neural networks and random forest models as particularly effective in crisis prediction, surpassing other methodologies. Notably, among the EWIs, variables related to credit, interest rates, and liquidity emerge as possessing relatively higher information value in discerning fragilities within the Indian banking system. Importantly, the methodological framework presented herein can be extrapolated for banking crisis prediction in other economies. [ABSTRACT FROM AUTHOR]

This article examines the effects of systemic banking crises on exporter dynamics using exporter data at the country-industry level from the Exporter Dynamics Database (EDD). By considering industries with varying levels of external finance dependence, we are able to capture the heterogeneous impacts of banking crises. Our results demonstrate that banking crises lead to a decrease in the number of successful market entries, a reduction in export market concentration, and a slowdown in both product dynamics and destination dynamics. These findings are robust when accounting for other financial crises, industry characteristics, and potential endogeneity concerns. Overall, our empirical evidence confirms the detrimental impact of banking crises on the extensive margin of exports. [ABSTRACT FROM AUTHOR]

How to finance the Green Transition toward net-zero carbon emissions remains an open question. The literature either operates within a market-failure paradigm that calls for carbon taxes or cap-and-trade to help markets correct themselves, or via war finance analogies that offer a "triad" of state intervention possibilities: taxation, treasury borrowing, and central bank money creation. These frameworks often lack a thorough conceptualization of endogenous credit money creation and disregard the systemic and procedural dimensions of financing the Green Transition. We propose "Monetary Architecture" as a more comprehensive framework that perceives the monetary and financial system as a constantly evolving and historically specific hierarchical web of interlocking balance sheets. Using the United States as a case study, we stress the importance of a systemic financing dimension that uses all available elasticity space in the monetary architecture while considering a division of labor between firefighting balance sheets such as central banks or treasuries and workhorse balance sheets such as off-balance-sheet fiscal agencies or shadow banks. Procedurally, public workhorses should provide an initial balance sheet expansion and crowd in the rest of the monetary architecture, notably shadow banks, for long-term funding. Firefighters should prevent systemic instability and manage a possible final contraction. [ABSTRACT FROM AUTHOR]

Shadow banks, such as investment funds, hedge funds, and mortgage finance companies, have grown rapidly in recent years. We analyze the link between monetary policy and the growth of shadow banks and, by extension, financial stability in Canada. Using monthly financial market data from 1991 to 2015, we first find that contractionary monetary policy does not cause the expected reduction in shadow bank business loans and mortgage loans as it does in chartered bank credit. This suggests that as shadow banks have grown in importance, the effectiveness of monetary policy in reducing inflation has been impaired. We find evidence to support that hypothesis using a two-stage time-varying coefficient Bayesian vector autoregression approach. [ABSTRACT FROM AUTHOR]

Within the recognized borders of Israel, in the shadow of the West Bank settlement enterprise, a new frontier is in the making. Central planning has designated the space as a burgeoning metropolitan region, and, in a parallel process, a network of Jewish-only settlements has been established. This study asks how the settlement push is narrated to the Israeli public, and thereby adds the Naqab to previous studies exploring the link between colonial settlement and suburbia, and more specifically with the community-settlement model. It analyzes audiovisual material produced by two Zionist organizations and finds that the new frontier is narrated as a space for reenactment of the mythic pioneer trope, and that this ideal is mediated in relation to the new neoliberal ethos of Israel as the "start-up nation." The study moreover expands on the interplay of geographic scales, thus adding an important contribution to scholarly understanding of contemporary settler-colonialism. [ABSTRACT FROM AUTHOR]

With the acceleration of world economic integration and enterprise management globalization, the advent of Internet of things based on Internet and information technology has become inevitable. The Internet of things also brings about a cascading effect between firms' shadow banking behaviour and bank connections. This study investigates the relationship between firms' shadow banking behaviour and bank connections by analysing a sample of Chinese listed firms in Internet of things industry. The results show that bank connections eliminate information asymmetry between banks and firms, bank connections are positively related to firms' long-term debt, and as long-term debt increases, firms' shadow banking behaviour also increases. Furthermore, this finding shows very strong robustness, the empirical analysis provides sufficient evidence that firms' shadow banking behaviour increased with bank connections in Internet of things industry. In addition, the evidence also shows that the tendency of shadow banking behaviour is more pronounced in non-state-owned enterprises (NSOEs) than state-owned enterprises (SOEs) by sub-sample sensitivity analysis. [ABSTRACT FROM AUTHOR]

In 2008 the global financial system experienced one of the largest financial crises in modern history. Since then, there have been heated debates regarding the reasons that led to its occurrence. Some argue that the reason behind it is the US housing bubble, including the inflation of the US mortgage market due to reckless mortgage lending behavior by banks, and the poor creditworthiness of borrowers, while others attribute it to the banks' over-engagement in shadow banking and the 'originate-to-distribute‘ banking model. Others put the blame on the credit rating agencies and their lack of credibility in evaluating the traded financial instruments. This research argues that all mentioned reasons can be largely linked to excessive and unrestricted use of new financial innovations, making it the primary cause of the crisis. When mentioning financial innovations, this research mainly refers to structured finance instruments, namely collateralized debt obligations (CDOs) and Synthetic CDOs, as they were the ones that were prevalent at that time. This is due to the harmful practices involved in these products, both at the stage of their creation and circulation in the financial market. This research examines each stage of the production and circulation of these financial products, analyzes the adverse practices they contain, and explains the damage they have done to the financial system as a whole that led to the imminent collapse of the American financial market, resulting in the global financial crisis. [ABSTRACT FROM AUTHOR]

This study describes a comprehensive bibliometric analysis of shadow banking and financial contagion dynamics from 1996 to 2022. Through a holistic approach, our study focuses on quantifying the impact and uncovering significant trends in scientific research related to these interconnected fields. Using advanced bibliometric methods, we explored the global network of publications, identifying key works, influential authors, and the evolution of research over time. The results of the bibliometric analysis have highlighted an annual growth rate of 22.05% in publications related to the topics of shadow banking and financial contagion, illustrating researchers' interest and the dynamic nature of publications over time. Additionally, significant increases in scientific production have been recorded in recent years, reaching a total of 178 articles published in 2022. The most predominant keywords used in research include "systemic risks", "risk assessment", and "measuring systemic risk". The thematic evolution has revealed that over time, the focus on fundamental concepts used in analyzing these two topics has shifted, considering technological advancements and disruptive events that have impacted the economic and financial system. Our findings provide a detailed insight into the progress, gaps, and future directions in understanding the complex interplay of shadow banking and financial contagion. Our study represents a valuable asset for researchers, practitioners, and policymakers with a keen interest in understanding the dynamics of these critical components within the global financial system. [ABSTRACT FROM AUTHOR]

Using popular liability‐side wealth management products in China, we construct an informative measure of shadow funding and shadow credit by extension. This measure reflects the risk appetites of financial intermediaries and their ability to expand their balance sheets through bank–shadow‐bank cooperation. Our measure possesses unique predictive power for future economic activity. An increase in the measure corresponds to increases in investment and consumption, which, in turn, reduce financing costs due to improvements in economic development. [ABSTRACT FROM AUTHOR]

Why are international regulatory standards not set? While most of the literature focuses on explaining positive cases of standard-setting where international rules are agreed upon, weak or negative cases remain prevalent and yet surprisingly under-explored. To explain these cases in the area of financial services, we integrate an inter-state explanation, which focuses on competition between major jurisdictions, with a transgovernmental explanation, which relates to conflict between different regulatory bodies at the international level. We also consider how these dimensions interact with financial industry lobbying. This allows us to construct a typology differentiating between distinct types of cases concerning international standard-setting: (1) absent standards, (2) non-agreed standards, (3) symbolic standards, and (4) agreed standards. The explanatory leverage of our approach is illustrated through a systematic structured focused comparison of four post-crisis cases related to “shadow banking.” The article generates novel insights into regulatory conflicts and the scope conditions for international agreement. [ABSTRACT FROM AUTHOR]

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This paper investigates whether green credit policy can mitigate firms' financialization. Using data from Chinese non-financial public listed firms during 2008 to 2019, we take the green credit policy promulgated in 2012 as a quasi-natural experiment and find that: (1) the green credit policy can reduce firms' entrusted loans, especially affiliated entrusted loans. Moreover, the governance effect exerted by banks' green credit policy reduces free cash flow and excess cash in heavily polluting firms, as shown in mechanism analysis. (2) The profit-seeking incentive dominates shadow banking activities in heavily polluting enterprises. (3) The 2012 green credit guidelines reduce entrusted loans maturity but increase the interest rate. The findings of this paper provide market-oriented insights into the regulation of shadow banking activities. This research also contributes to the literature on the effects of green credit policy by exploring their impact on firm shadow banking activities, and takes one step further to investigate the effect of green credit policy on firms' entrusted loans. This paper also sheds light on how green credit policy can alleviate the imperfections and distortions of financial markets in the emerging market. [ABSTRACT FROM AUTHOR]

We empirically document two adjustment margins that are usually absent from the predominant "bank balance sheet lending" view of financial intermediation. For the shadow bank substitution margin, shadow banks substitute for traditional banks among loans that are easily sold. For the balance sheet retention margin, banks switch between balance sheet lending and selling loans based on their balance sheet strength. Estimates from a structural model show that these margins significantly shape policy responses, dampening the effect of capital requirements on lending whose costs are borne by wealthier borrowers. Secondary-market disruptions such as quantitative easing have significantly larger impacts on lending than capital requirements. [ABSTRACT FROM AUTHOR]

The impact of shadow banking on financial stability remains a controversial issue today due to the size and complexity of these activities and the inadequate regulatory frameworks for systemic risks. In this context, shadow banking has become the focus of financial regulators due to its potential effects on financial stability. Therefore, this study was conducted to understand the impact of shadow banking on financial stability. In this study, the relationship between shadow banking and financial instability is examined using the VAR method for the example of the United States, covering the period 2000-2020. In order to create an accurate model, firstly unit root tests were performed, followed by autocorrelation and heteroscedasticity tests. The findings were found to be significant and Johansen cointegration test was applied. In the cointegration results, it was seen that the series were cointegrated, that is, they moved together in the long run. Finally, a Granger causality test was conducted between shadow banking and financial instability, and according to the empirical findings, it was concluded that there was a causality from shadow banking to financial instability for the period in question. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

Using entrusted loan data of Chinese listed enterprises, we study whether the implementation of macroprudential policy leads to enterprise policy arbitrage. Our findings reveal that tightening macroprudential policies significantly contribute to the promotion of shadow banking activities among Chinese enterprises, confirming the existence of policy leakage. When the overall credit is tight, non‐affiliated loans and loans to privately‐owned enterprises increase significantly. Tightening policies also have a more substantial effect on the borrowing cost of non‐affiliated and privately‐owned enterprise borrowers. To enhance the effectiveness of macroprudential policy, our results suggest the necessity of providing appropriate credit supports for small and medium enterprises. [ABSTRACT FROM AUTHOR]

The article delves into the transformative potential of stablecoins and fractional-reserve banking within the financial sector. It examines Bitcoin's value proposition and the rise of stablecoins as viable alternatives for everyday transactions. It underscores the advantages of blockchain-based payment systems over centralized banking networks and suggests that future stablecoin issuers may innovate and operate as fractional reserve banks, thereby increasing efficiency and stability.

This paper examines whether and how individual risk-taking behavior affects real estate financing through shadow banks. Using the loan data from an online platform in China, we show that riskier households tend to employ online loans to meet the increasing down-payment in their home purchase. Individual investors are likely to fund riskier real estate loans with higher expected returns. Real estate loans experience higher ex-post default rates than other types of loans. The effect is more pronounced during the period of credit constraints. [ABSTRACT FROM AUTHOR]

Sustainable banking is a banking model that integrates environmental, social and governance (ESG) criteria into its operations and decision-making processes. It is focused on promoting sustainable development by considering the long-term impact of its activities on society, the economy and the environment. During the beginning of 80’s, the extensive literatures on sustainable banking were unproductive and this issue continues to the end of 2000’s. Based on this situation, the researchers used Bibliometric analysis of various literatures of about 719 studies which includes articles, reviews, conference papers, book chapters from Scopus and Web of Science (WoS) categories during the period 2000–2021. About 2324 studies were identified from the database. To undergo the research, we acknowledged the main domains which are closely related to sustainable banking from its evolution. The main domains such as corporate social responsibility, banking sector, economic growth, ethical banking, financial stability, green banking, sustainable finance, banking industry, banking system, micro finance and banking regulations. Further we mapped with this into VOS Viewer and analysed how these domains can contribute to sustainability in the banking sector. It is found that, several climatic risks are faced by the banking sector all over the world and hence, the financial sector must make necessary alterations to environmentally friendly strategies to climate sensitive sectors. Sustainability is still under a question mark in the banking sector as several advancements are being introduced not only in technology but also in physical appearance day by day. Finally, to say, the banks must engage in green sustainable strategies towards sustainable banking in the banking industry. [ABSTRACT FROM AUTHOR]

The agency problem is corporate law's most enduring challenge: when corporate managers spend investors' money, how does the law protect investors from reckless management? Scholars of law, fnance, and accounting have suggested that in one corner of corporate law--corporate debt--a powerful tool exists to mitigate the agency problem. Specifcally, through loan covenants, lenders can force borrowers to comply with lenders' preferences, thereby mitigating the agency problem in lending. But loan covenants are disappearing. Over the last decade, loan covenants have become fewer and skinnier, and so called "covenant-lite" or "cov-lite" loans have become dominant. If loan covenants do such a good job of mitigating agency costs, why have lenders willingly parted with them? This Article attempts to unravel the puzzle of disappearing covenants, and makes three contributions to literatures in law, fnance, and accounting. First, using an original, hand-collected, and hand-coded dataset of 7,638 loan agreements spanning the last decade, this Article shows for the frst time that fnancial covenants--the focus of most existing research--are not the only covenants disappearing. Rather, governance covenants, such as those that might give lenders the right to engage with the borrower's board of directors, are also disappearing. This Article coins the term "gov-lite" to describe loans that have few governance covenants and shows, for the frst time, how prevalent gov-lite loans have become, even in ways that sometimes diverge from the covlite trend. Second, this Article draws from original interviews with lawyers working in corporate lending to explain the source and importance of this trend. This qualitative empirical evidence shows that regulation, the structure of the loan industry, and the rise of shadow banking have all contributed to the cov-lite and gov-lite trends. Finally, this Article explores the important theoretical and practical implications of the covlite and gov-lite trends. It discusses how the disappearance of covenants exacerbates the agency problem for lenders and shareholders, and how can stakeholders use covenants to advance social interests. [ABSTRACT FROM AUTHOR]

In the current paper, we aim to examine the Shadow Banking System (SBS) in a number of developed countries, more precisely nine countries from Europe and the United States for the period 2002-2018. The goal is to define which are the key determinants that drive the SB processes. To this end, we run simple robust panel estimations. As a result of this analysis, we have reached a number of conclusions: 1/ the roles of banks, insurance companies and pension funds are important, 2/ changes in banking variables, such as the capital ratios, lead to an increase in shadow banking activity, 3/ there is a negative relation between banking interest margins and shadow banks, and 4/developments on the stock market affect shadow banking positively. However, given the limitations in terms of data size and evolving definitions, our findings are not generalizable. Our main recommendation is to develop a more granular and reliable approach to improve the quality of empirical research and reduce the literature gap. [ABSTRACT FROM AUTHOR]

This study aims to investigate two issues: The impacts of shadow banking activities on bank shareholder value, and the relationship between managerial ability and shadow banking engagement in China. Using the differences in the Basel II capital adequacy ratio to represent the extent commercial banks get involved in shadow banking activities, the authors regress the econometric models using the generalized method of moments. The robustness tests are conducted regarding different risk weights, alternative measures, and model specifications. Thence, the authors found growths in trust beneficiary rights increase banks’ shareholder values, thus suggesting that banks enrich their shareholder wealth while engaging in the shadow banking business. Further, we found that more able managers intend to join the shadow banking business. Given that the purpose of bank management is to enrich shareholder value, we contributed to the literature that joining the shadow banking business can benefit bank shareholders. [ABSTRACT FROM AUTHOR]

In recent years, with the rapid expansion of commercial banks' non-standardized business, the systematic correlation between shadow banking and commercial banks in China has been gradually enhanced, which enables the partial liquidity crisis of shadow banking to spread rapidly to commercial banks, leading to the increased vulnerability of China's financial system. Based on this, we built shadow banking indexes of trusts, securities, private lending and investments, introduced the dynamic correlation coefficient calculated by the dynamic conditional correlation multivariate GARCH model into the improved CoVaR model, and used the DCC-BEKK-MVGARCH-Time-Varying CoVaR Model to measure the risk overflow contribution of shadow banking in China. We find that shadow banking and commercial banks have an inherent relationship. Due to their own risks, different types of shadow banking contribute to the risk spillover to commercial banks in different degrees. The risk correlation between shadow banking and commercial banks fluctuates. Securities, trusts, private lending and investments shadow banking have different degrees of risk spillover contributions to commercial banks. Securities shadow banking has the highest risk spillover contribution. The next is trusts shadow banking. The risk spillover contributions from private lending and investments shadow banking are lower, but their volatilities are higher. The supervising department should standardize the information disclosure system of shadow banking and establish the risk firewall of commercial banks and shadow banking from the perspective of the risk spillover contribution. [ABSTRACT FROM AUTHOR]