Journal Article

The Global Pandemic and Run on Shadow Banks

Abstract: In March, the global coronavirus pandemic led to a period of financial stress in which credit conditions tightened at an unprecedented pace. Elements of this stress period can be explained as a classic run on “shadow banks”—nonbank financial institutions that fund long-term assets with short-term debt. Although timely Federal Reserve interventions restored some calm to markets, shadow banks remain vulnerable to future runs because they lack the safeguards available to regulated depository institutions.

Keywords: COVID-19; Federal Reserve; Pandemic; Financial stress; Shadow Banks; Banking; Credit;

JEL Classification: E4; E43; G21;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2020-05-11

Issue: May 11, 2020

Pages: 5