Shadow Banking
Scope, Origins and Theories
Routledge Critical Studies in Finance and Stability Series

Shadow banking ? a system of credit creation outside traditional banks ? lies at the very heart of the global economy. It accounts for over half of global banking assets, and represents a third of the global financial system. Although the term ?shadow banking? only entered public discourse in 2007, the importance and scope of this system is now widely recognised by the international policy-makers. There is, however, much less consensus on the origins of the shadow banking system, what role it plays in global political economy and the optimal approach to regulating this complex segment of finance. This volume addresses these questions.

Shadow Banking is the first study to bring together the insights from financial regulators, practitioners and academics from across the social sciences. The first part traces the evolution and ongoing confusion about the meaning of ?shadow banking?. The second section draws major lessons about shadow banking as posed by the financial crisis of 2007?09, providing comparative analyses in the US and Europe, and attempts to establish why shadow banking has emerged and matured to the level of a de facto parallel financial system. Finally, the third part goes beyond current regulatory concerns about shadow banking and explains why it is ?here to stay?.

This volume is of great importance to political economy, banking and international political economy.

INTRODUCTION

SHADOW BANKING: THE POLITICAL ECONOMY OF FINANCIAL INNOVATION

Anastasia Nesvetailova

PART I. SCOPING THE SHADOW BANKING SYSTEM

CHAPTER 1. SHADOW BANKING: A VIEW FROM THE USA

Zoltan Pozsar

CHAPTER 2. THE TRANFORMATION OF BANKING

Robert Guttmann

CHAPTER 3. HOW SHADOW BANKING BECAME NON-BANK FINANCE: THE CONJUCTURAL POWER OF ECONOMIC IDEAS

Ewald Engelen

CHAPTER 4. SHADOW BANKING, GERMAN BANKING AND THE QUESTION OF POLITICAL ORDER

Oliver Kessler and Benjamin Wilhelm

CHAPTER 5. SHADOW BANKING IN CHINA: INSTRUMENTS, ISSUES, TRENDS

Jianjun Li and Sara Hsu

CHAPTER 6. THE TWO SHADOW BANKING SYSTEMS IN RUSSIA

Natalia Kaurova

PART II. CRISIS AND BEYOND. SHADOW BANKING AND ITS ORIGINS

CHAPTER 7. THE SHADOW BANKING SYSTEM DURING THE FINANCIAL CRISIS OF 2007-08: A COMPARISON OF THE US AND THE EU

Antoine Bouveret

CHAPTER 8. EUROPEAN MONEY MARKET FUNDS: A STUDY OF THE MARKET MICRO-PROCESSES

Viktoria Baklanova and Joseph Tanega

CHAPTER 9. SHADOW CONNECTIONS. ON HIERARCHIES OF COLLATERAL IN SHADOW BANKING

Daniela Gabor

CHAPTER 10. INVESTMENT FUNDS, SHADOW BANKING AND SYSTEMIC RISK

Elias Bengtsson

PART III. BANKING ON THE FUTURE: THE STRUCTURAL DEMAND FOR FINANCIAL INNOVATION

CHAPTER 11. WHY OVERCAPITALIZATION DRIVES BANKS INTO THE SHADOWS

Jan Toporowski

CHAPTER 12. THE FUTURE FOR THE TOP 1 PER CENT: THE REAL ROLE OF HEDGE FUNDS IN THE SUBPRIME CRISIS

Photis Lysandrou

CHAPTER 13. THE ECONOMY OF DEFERRAL AND DISPLACEMENT: FINANCE, SHADOW BANKING AND FISCAL ARBITRAGE

Ronen Palan, Mike Rafferty and Duncan Wigan

CHAPTER 14. SHADOW BANKING AND THE CHALLENGES FOR CENTRAL BANKS

Thorvald Grung Moe

CONCLUSION. SHADOW BANKING: INTO THE LIMELIGHT

Anastasia Nesvetailova

Anastasia Nesvetailova is Director of City Political Economy Research Centre, City University of London, UK. Her main research and teaching interests lie in the area of international political economy, finance and financial crises, regulation and governance.