Thursday, July 08, 2010

New Paper: "Shadow Banking"

by Calculated Risk on 7/08/2010 10:56:00 PM

For a little light reading: Zoltan Pozsar, Tobias Adrian, Adam Ashcraft and Hayley Boesky (now at BofA) of the NY Fed have written a new Staff Report: Shadow Banking

From the authors:

Our monograph “Shadow Banking” documents the origins, evolution and economic role of the shadow banking system. Its aim is to aid regulators and policymakers globally to reform, regulate and supervise the process of securitized credit intermediation in a market-based financial system.
It is hard to summarize this paper, but here are a couple of excerpts:
At the eve of the financial crisis, the volume of credit intermediated by the shadow banking system was close to $20 trillion, or nearly twice as large as the volume of credit intermediated by the traditional banking system at roughly $11 trillion.
...
Some segments of the shadow banking system have emerged through various channels of arbitrage with limited economic value ...