What drives the shadow banking system in the short and long run?

John Duca

No 1401, Working Papers from Federal Reserve Bank of Dallas

Abstract: This paper analyzes how risk and other factors altered the relative use of short-term business debt funded by the shadow banking system since the early 1960s. Results indicate that the share was affected over the long-run not only by changing information and reserve requirement costs, but also by shifts in the impact of regulations on bank versus nonbank credit sources?such as Basel I in 1990 and reregulation in 2010. In the short-run, the shadow share rose when deposit interest rate ceilings were binding, the economic outlook improved, or risk premia declined, and fell when event risks disrupted financial markets.

Keywords: shadow banking; regulation; financial frictions; credit rationing (search for similar items in EconPapers)
JEL-codes: E44 E50 N12 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014-02-13
New Economics Papers: this item is included in nep-ban, nep-mac and nep-sog
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:1401

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DOI: 10.24149/wp1401

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