Kinne Andersen & Camilla Gøthler

Studenteropgave: Kandidatafhandlinger


Through the nancial crisis, the term "shadow banking"appeared in headlines and descrip- tions of the contagion in money and capital markets. Regulatory changes and innovation eroded the advantage of traditional banking, and led to the growth of the shadow banking system. The purpose of this thesis is to de ne the shadow banking system, and its many complicated activities. We want to determine how the shadow banking system has a ected the whole nancial system through its many channels of nancial intermediation. Throughout much of the 20th century traditional banks served as the primary intermediary between the source of loanable funds and borrowers. Starting in the mid-1970s nancial in- novation and technology advances opened up for the shadow banking system. A system with less transparency and regulation compared to the traditional system. Shadow banks are a global market-system which perform bank-like activities like conducting maturity, liquidity, and credit transformation but without explicit public sector credit gua- rantees or liquidity access. Three important parts of the shadow banking system are money market mutual funds, repurchase-agreements (repos), and securitization, which all contribute to the chain of nan- cial intermediation in the system. These entities played an important role during the nancial crisis because of their reliance on short-term funding, and because of the complicated and advanced securitization process where loans were pooled and tranched. This nancial system was vulnerable - a run on the shadow banking activities that had build leverage during the credit boom led to a collapse. This nancial fragility is described in a model of shadow banking. Since the nancial crisis there have been persistent calls from regulators, academics and others for new regulations on the shadow banking system, but how this system should be regulated, and if regulation helps to reduce the fragility in the shadow banking system is uncertain.

UddannelserCand.merc.mat Erhvervsøkonomi og Matematik, (Kandidatuddannelse) Afsluttende afhandling
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