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Fève, Patrick
, Moura, Alban and Pierrard, Olivier
(2017)
Financial Regulation and Shadow Banking: A Small-Scale DSGE Perspective.
TSE Working Paper, n. 17-829, Toulouse
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Abstract
This paper estimates a small-scale DSGE model of the US economy with interacting traditional and shadow banks. We find that shadow banks amplify the transmission of structural shocks by helping escape constraints from traditional intermediaries. We show how this leakage toward shadow entities reduces the ability of macro-prudential policies targeting traditional credit to reduce economic volatility. A counterfactual experiment suggests that a countercyclical capital buffer, if applied only to traditional banks, would have in fact amplified the boom-bust cycle associated with the financial crisis of 2007-2008. On the other hand, a broader regulation scheme targeting both traditional and shadow credit would have helped stabilize the economy.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Sub-title: | A Small-Scale DSGE Perspective |
| Language: | English |
| Date: | July 2017 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | Shadow Banking, DSGE models, Macro-prudential Policy |
| JEL Classification: | C32 - Time-Series Models E32 - Business Fluctuations; Cycles |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse 1 Capitole |
| Site: | UT1 |
| Date Deposited: | 14 Mar 2018 13:42 |
| Last Modified: | 29 Jun 2021 09:21 |
| OAI Identifier: | oai:tse-fr.eu:31822 |
| URI: | https://publications.ut-capitole.fr/id/eprint/24200 |
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- Financial Regulation and Shadow Banking. (deposited 14 Mar 2018 13:42) [Currently Displayed]
