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Shadow Banking and the Four Pillars of Traditional Financial Intermediation / Emmanuel Farhi, Jean Tirole.
- Format:
- Book
- Author/Creator:
- Farhi, Emmanuel.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w23930.
- NBER working paper series no. w23930
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2017.
- Summary:
- Traditional banking is built on four pillars: SME lending, insured deposit taking, access to lender of last resort, and prudential supervision. This paper unveils the logic of the quadrilogy by showing that it emerges naturally as an equilibrium outcome in a game between banks and the government. A key insight is that regulation and public insurance services (LOLR, deposit insurance) are complementary. The model also shows how prudential regulation must adjust to the emergence of shadow banking, and rationalizes structural remedies to counter financial contagion: ring-fencing between regulated and shadow banking and the sharing of liquidity in centralized platforms.
- Notes:
- Print version record
- October 2017.
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