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shadow banking: a review of the literature

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Abstract

The shadow banking system is a web of specialised financial institutions that channel funding from savers to investors through a range of securitisation and secured funding techniques. Although shadow banks—the institutions that constitute the shadow banking system—conduct credit and maturity transformation similar to that of traditional banks, they do so without the direct and explicit public sources of liquidity and tail risk insurance available through the Federal Reserve’s discount window and the Federal Deposit Insurance Corporation. Shadow banks are therefore inherently fragile, not unlike the commercial banking system prior to the creation of the public safety net. This definition closely follows that of Pozsar et al., (2010).

Keywords

  • Federal Reserve
  • Financial Account Standard Board
  • Tail Risk
  • Collateralised Debt Obligation
  • Bank Holding Company

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Adrian, T., Ashcraft, A.B. (2016). shadow banking: a review of the literature. In: Jones, G. (eds) Banking Crises. Palgrave Macmillan, London. https://doi.org/10.1057/9781137553799_29

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