Shadow Banking and Bank Capital Regulation
Guillaume Plantin
No 322014, Working Papers from Hong Kong Institute for Monetary Research
Abstract:
Banks are subject to capital requirements because their privately optimal leverage is higher than the socially optimal one. This is in turn because banks fail to internalize all the costs that their insolvency creates for the non-financial agents using their money-like liabilities to settle transactions. If banks can bypass capital regulation in an opaque shadow-banking system, it may be optimal to relax capital requirements so that liquidity dries up in the shadow-banking system. Tightening capital requirements may spur a surge in shadow-banking activity that leads to an overall larger risk on the money-like liabilities of the formal and shadow banking institutions.
Pages: 39 pages
Date: 2014-12
New Economics Papers: this item is included in nep-cba, nep-cta and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)
Downloads: (external link)
http://www.hkimr.org/uploads/publication/406/wp-no-32_2014-final-.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.hkimr.org/uploads/publication/406/wp-no-32_2014-final-.pdf [301 Moved Permanently]--> http://www.aof.org.hk/research/HKIMR/uploads/publication/406/wp-no-32_2014-final-.pdf [301 Moved Permanently]--> https://www.aof.org.hk/research/HKIMR/uploads/publication/406/wp-no-32_2014-final-.pdf)
Related works:
Journal Article: Shadow Banking and Bank Capital Regulation (2015) 
Working Paper: Shadow Banking and Bank Capital Regulation (2015) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hkm:wpaper:322014
Access Statistics for this paper
More papers in Working Papers from Hong Kong Institute for Monetary Research Contact information at EDIRC.
Bibliographic data for series maintained by HKIMR ().