Shadow banking has grown in importance, to even rival traditional banking. However, its role in fuelling real estate bubbles which burst in the later 2000s is commonly attributed as one of the major causes of the global financial crisis.
In this study, Valerio Lemma provides a complete overview of the shadow banking system from a legal and economic perspective. He defines the current regulatory framework of shadow banking and explores its impact on financial firms. By analysing the rules governing this market based financial system, the author highlights the functions of the system, and investigates its entities, operations and risks. Focusing on the regulatory aspects of shadow banking, this book provides an original view, demonstrating that unregulated banking and finance and the current lack of supervision in shadow banking is a market failure. This core research identifies a need for transparency in the shadow areas of capital markets, and finally suggests a resolution for thestrengthened control of shadow banking entities and operations.

This book would be fundamental reading for academics conducting research in any relevant fields within banking, finance, economics and law. It would also be a useful source for students of degree programs and postgraduate courses on banking and finance.

Autorentext

Valerio Lemma is an Associate Professor of Law and Economics at the Università degli Studi Guglielmo Marconi in Rome, Italy, and a visiting Associate Professor at Regent's University, UK. He is a professional lawyer within the District of Rome, and attained his degree in Economics, his degree in Law (2006), and his Ph. D. in finance (2010) at Luiss University of Rome, Italy. He has written books previously on real estate investment funds and the reform of project financing, as well as more the 40 articles on banking, finance and insurance regulation.

Zusammenfassung

The book shows the fundaments of the shadow banking system and its entities, operations and risks. Focusing on the regulatory aspects, it provides an original view that is able to demonstrate that the lack of supervision is a market failure.

Inhalt

PART I: GENERAL OBSERVATIONS 1.1 The Identification Of The Phenomenon 1.2 The Traditional Definitions Of The Shadow Banking System: The Guidelines Of The Financial Stability Board And The Statement Of The G20 1.3. The Directions Of Certain Central Banks 1.4. The Routes Of European Institutions 1.5 The Path Of Emerging Countries 1.6 The Interpretations Of The Phenomenon 1.7. The Different Outcomes Of The Monetary And Supervisory Perspectives 1.8 The Boundaries Of The Shadow Banking System: Money Laundering, Tax Evasion And Other Forms Of The 'Black Market.' PART II: THE SHADOW BANKING SYSTEM AS AN ALTERNATIVE SOURCE OF LIQUIDITY 2.1. The Economic Determinants Of The Shadow Banking System 2.2. Information Asymmetries 2.3. Opacity, Pro-Cyclicality And System Instability 2.4. Methods For Classification Of The Phenomenon 2.5. Is This Economic Freedom Or Escape From Regulation? 2.6. The Global Nature And The Riskiness Of The Phenomenon 2.7. NewFreedoms And Their Problematic Nature PART III: SHADOW BANKING ENTITIES 3.1 Special Purpose Vehicles 3.2 Shadow Banks 3.3. Other Shadow Banking Entities 3.4. The Shadow Funds 3.5. The Particular Role Of Money Market Funds PART IV: SHADOW BUSINESSES OF BANKS, INSURANCE COMPANIES AND PENSION FUNDS 4.1. Multi-Phasic Nature Of The Shadow Banking System And Plurality Of Traditional Operators 4.2. The Role Of Banks In The Shadow Banking System 4.3. The Dysfunctions Of Internal Controls And Of The Weaknesses Of Other Safeguards 4.4. The Action Of The Insurance Companies 4.5. The Involvement Of Pension Funds PART V: SHADOW BANKING OPERATIONS 5.1. Shadow Credit Intermediation Process 5.2. An Undetermined (In The Contents) And Unconfined (Within The Boundaries) Reality 5.3. The Operations Of The Credit Transformation 5.4. The New Securitization Techniques 5.5. Effects On The Maturities Of The Operations And On The Levels Of Financial Leverage 5.6. Ratings (In The Shadows) PART VI: NON STANDARD OPERATIONS IN THE SHADOW BANKING SYSTEM 6.1. The Use Of Securities Lending And Borrowing And Repurchase Agreements 6.2. The Offering Of The Asset-Backed Commercial Paper, Asset-Backed Securities And Collateralized Debt Obligations 6.3. Peculiarities Of Derivatives 6.4. The Shadow Banking Operations Of Sovereign States 6.5. The Use Of Derivatives (To Face The Crisis) By Sovereign States 6.6. The Shadow Banking Operations Of The Credit Institutions PART VII: SHADOW BANKING RISKS AND KEY VULNERABILITIES 7.1. Areas Of Risk In The Shadow Banking System 7.2. Risk Factors 7.3. Operators And Policies Of Risk Management 7.4 Operational Freedom Inside The Shadow Banking System 7.5. The Risks Of Organizations 7.6. The Prospective Regulation Of The Operations 7.7. The Risks Of Governance 7.8 The Impact Of European Regulation On The Management 7.9. The Risks Of The Entities 'Too Big To Fail'<7.10. The Exogenous Risks 7.11. The Particular Implication Of Monetary Policies PART VIII: THE SHADOW BANKING SYSTEM AND THE NEED FOR SUPERVISION 8.1. Deregulation Of Financial Markets And Monitoring Of «Shadow Banking System» 8.2. Economic Determinants Of The Supervisory System On The Shadow Banking 8.3 The Shadow Banking System In The European Internal Market 8.4. The Role Of European Institutions 8.5. New Supervision Of The Shadow Banking System In Eu: The Action Of The European Commission 8.6. The Action Of The European System Of Financial Supervision 8.7. The Responsibilities Of The European Supervising Authorities 8.8. The Tasks Of The European Banking Union 8.9. The Impact Of The New Targeted Longer-Term Refinancing Operations Of The ECB 8.10. Evolutionary Trends Of European Supervision (Following Directive 2014/65/EU) 8.11. The Role Of Global Regulators: The World Bank And The International Monetary Fund 8.12. 'Limited Effects' Of Monitoring And Supervision Designed By The Financial Stability Board