Discussion Paper

Understanding the risks inherent in shadow banking: a primer and practical lessons learned

Abstract: Examinations of the 2007?09 financial crisis often use the term shadow banking. This paper explains the form and functioning of the shadow banking system, how it relates to systemic risk and the recent financial crisis, and what particular aspects should be highlighted to benefit policymakers as they implement new regulations designed to enhance financial market resiliency. The paper is divided into two parts: The first serves as a primer on shadow banking; the second provides a narrative of how the system froze during the financial crisis and pertinent lessons learned for the current reform effort.

Keywords: Financial crises; Regulation; Systemic risk;

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Staff Papers

Publication Date: 2012

Issue: Nov

Order Number: 18