Shadow banking and the financial side of financialization

Eugenio Caverzasi, Alberto Botta and Clara Capelli

No 22986, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: This paper tries to shed some light on the nature and functioning of shadow banking, with a special focus on its role in the evolution of financialization as well as in sharpening income and wealth inequality. On the one hand, it discusses how securitization has allowed traditional banks to expand their business, providing the financial system with the “raw materials” for the manufacturing of complex structured financial products. On the other hand, it questions the view of traditional and shadow banks as two parallel and alternative systems, claiming that financialization did not alter the role of commercial banks as money creators, but rather diverted endogenously created money to the financial sphere, feeding its expansion. Finally, our work discusses some policy options for the de-financialization of the economy through more progressive taxation of the financial sector, as well as a stronger engagement to reduce income and wealth inequality.

Keywords: shadow banking; de-financialization (search for similar items in EconPapers)
JEL-codes: G0 (search for similar items in EconPapers)
Date: 2019-05-23
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Citations: View citations in EconPapers (6)

Published in Cambridge Journal of Economics 4.43(2019): pp. 1029-1051

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http://gala.gre.ac.uk/id/eprint/22986/9/22986%20BO ... cialization_2019.pdf

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Journal Article: Shadow banking and the financial side of financialisation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:gpe:wpaper:22986

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