Financial Architecture and Financial Stability

Ansgar Walther and Franklin Allen

No 16204, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies the links between financial stability and the architecture of financial systems. We review the existing literature and provide organizing frameworks for analyzing three empirically important aspects of financial architecture: The rise of non-bank financial intermediaries, the regulatory response to these structural changes, and the emergence of complex interbank networks. One of our main new results is a necessary and sufficient condition for whether non-bank intermediaries are immune to runs in an extended version of the Diamond-Dybvig model.

Keywords: Financial architecture; Financial stability; Shadow banks; Interbank networks; Financial regulation (search for similar items in EconPapers)
JEL-codes: G01 G21 G23 G28 (search for similar items in EconPapers)
Date: 2021-05
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