This research study aims at to discover the effects of evolving concept of the shadow banking system and particularly assessing how the major elements of shadow banking system such as Money Market Mutual Funds, Repurchase Agreements and Asset-Backed Commercial Papers would move to financial market distress. The Shadow banking have major contribution towards the great US financial crisis of 2007-2008 in the form of structural securities of SDOs due to lack of effective regulatory system and If the regulatory mechanism levied by Securities and Exchange Commissions and a stable monetary and fiscal strategies of central bank would be properly practiced, it can provide assistance to overcome the distressing situation of financial market. OLS method applied for analysis and two sample data sets are collected, firstly, for shadow banking system itself taken 29 countries as from the Global Financial Report (2017) and secondly, the outstanding level of time series data of money market mutual funds, repurchase agreements and asset-backed commercial papers in the context of US financial market through secondary data sources. The outcomes appeared as significant that are associated with our arguments given in the literature that through moderating role of regulations risk of financial market distress can be mitigate and the study hypothesis are verified. Hence, research framework proved statistically and a strong regulatory system can reduce the misbalancing situation of financial markets.
| Published in | Journal of Business and Economic Development (Volume 7, Issue 3) |
| DOI | 10.11648/j.jbed.20220703.12 |
| Page(s) | 71-85 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2022. Published by Science Publishing Group |
Repurchase Agreement, Shadow Banking System, Shadow Banking Regulations
| [1] | Aftab, Z., & Varotto, S. (2017, Sep 29). Liquidity and Shadow Banking. Retrieved from ssrnblog.com: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3043770 |
| [2] | Acharya, Viral V. & Schnabl, Philipp & Suarez, Gustavo,. (2013). Securitization without risk transfer. Journal of Financial Economics. |
| [3] | Acharya, Viral, Schnabl, P. & Suarez, G. (2010). Securitization Without Risk Transfer,. NBER Working Papers, 15730. |
| [4] | Adrian, T., & Ashcraft, B. A. (2012). Shadow Banking Regulation. Annual Review of Financial Economics, 4, 99-140. |
| [5] | Adrian, T., Begalle, B., Copeland, A., & Martin, A. (2013). Repo And Securities Lending", In Risk Topography: Systemic Risk And Macro Modeling. University of Chicago Press, 131-148. |
| [6] | Adrian. T., & Ashcraft, B. A. (2012). Shadow Banking: A Review Of The Literature. Retrieved from SSRN Electronic Journal: https://doi.org/10.2139/ssrn.2175144 |
| [7] | Agirman, E., Sercemeli, M., & Ozcan, M. (2013). Shadow Banking: An Overview. |
| [8] | Alnahedh, S., & Bhagat, S. (2017). "Shadow Banking Concerns: The Case of Money Market Funds.". |
| [9] | Bernanke, S. B.. (2009). The Crisis and the Policy Response. London School of Economics, London. Retrieved from https://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm |
| [10] | Baker, K. H., Filbeck, G., & Kiymaz, H. (2015). Mutual Funds And Exchange-Traded Funds. Oxford University Press, 195-196. |
| [11] | Bergstresser, D., John M. R., Chalmers, & Tufano, P.. (2009). "Assessing The Costs And Benefits Of Brokers In The Mutual Fund Industry. Review Of Financial Studies, 22, 4129-4156. |
| [12] | Burcu, B. D., Parkinson, M. P., Rosengren, S. E., Suarez, A. G., & Willen, S. P.". (2010, April 29). How Effective Were The Federal Reserve Emergency Liquidity Facilities? Evidence From The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility. Retrieved from Federal Reserve Bank of Bostan: http://www.bos.frb.org./bankinfo/qau/index.htm |
| [13] | Campello, M., Giambona, E., Graham, R. J., & Harvey, R. C. (2010). Liquidity Management and Corporate Investment During a Financial Crisis. The National Bureau of Economic Research ([w 16309]). |
| [14] | Copeland, A., Davis, I., LeSueur, E., & Martin, A. (2012). Mapping and Sizing the U. S. Repo Market. Retrieved from Liberty Street Economics: https://libertystreeteconomics.newyorkfed.org/2012/06/mapping-and-sizing-the-us-repo-market.html |
| [15] | Copeland, Adam, Martin, Antoine, & Walker, M. (2010). “The Tri-Party Repo Market Before the 2010 Reforms. Federal Reserve Bank of New York Staff Report. |
| [16] | Coval, D. J., Jurek, J., & Stafford, E. (2008). The Economics Of Structured Finance. Journal Of Economic Perspectives, 23, 3-25. |
| [17] | Davidoff, M. S., & Zaring, D. (2009). Regulation By Deal: The Government's Response To The Financial Crisis. Administrative Law Review, 61 (3), 463-541. Retrieved from https://www.jstor.org/stable/40712060 |
| [18] | DeGennaro, P. R., & Domian, L. D. (1996). Market Efficiency And Money Market Fund Portfolio Managers: Beliefs Versus Reality. The Financial Review, 31, 453-474. |
| [19] | Domian, L. D., & Reichenstein, W. (1997). Performance And Persistence In Money Market Fund Returns. Financial Services Review, 6, 169-183. |
| [20] | Duffie, David A., Darrell & Skeel. (2012). "A Dialogue on the Costs and Benefits of Automatic Stays for Derivatives and Repurchase Agreements". Faculty Scholarship, 386. Retrieved from http://scholarship.law.upenn.edu/faculty_scholarship/386 |
| [21] | Dungey, M., & Gajurel, D. (2015). "Contagion and banking crisis–International evidence for 2007–2009". Journal of Banking & Finance, 60, 271-283. |
| [22] | Eric, H.. (2010). What Role For The New Financial Stability Board? The Politics Of International Standards After The Crisis. Global Policy, 1, 282-290. |
| [23] | Esther, J., & Plihon, D. (2014). Universal banking and shadow banking in Europe. Retrieved from Congres: < https://afep2014.sciencesconf.org/44577/document> |
| [24] | Federal Reserve First Monetary Policy Report For 2011. Washington, DC: U. S. Govt. Printing Office. |
| [25] | Gary, G., & Metrick, A. (2012). Securitized Banking And The Run On Repo. Journal Of Financial Economics, 104, 425-451. |
| [26] | Gary, G., & Pennacchi, G. (1990). Financial Intermediaries And Liquidity Creation. The Journal Of Finance, 45, 49. |
| [27] | Gorton, Andrew, Gary & Metrick. (2012). Securitized banking and the run on repo. Journal of Financial Economics, 104 (3), 425-451. |
| [28] | Gorton, G., Metrick, A., Shleifer, A., & Tarullo, D. K. (2010). "Regulating the shadow banking system". Brookings papers on economic activity, 261-312. |
| [29] | Hanson, G. S., Scharfstein, S. D., & Sunderam, A. (2015). An evaluation of money market fund reform proposals. IMF Economic Review, 63 (4), 984-1023. |
| [30] | Hanson, S., Kashyap, K. A. & Stein, C. J. (2011). A macroprudential approach to financial regulation. Journal of economic Perspectives, 25 (1), 3-28. |
| [31] | Hester, P., & Greene, R. (2014). Opening The Gate To Money Market Fund Reform. SSRN Electronic Journal. Retrieved from https://doi.org/10.2139/ssrn.2533195 |
| [32] | ICE Benchmark Administration Limited (IBA). (2019, March 5). 12-Month London Interbank Offered Rate (LIBOR), Based On U. S. Dollar. Retrieved from Fedral Reserve Bank of St. Louis: https://fred.stlouisfed.org/series/USD12MD156N |
| [33] | Kacperczyk, M., & Schnabl, P. (2012). The Risk Taking Incentives of Money Market Funds. New York University. Department of Finance Stern School of Business and NBER. |
| [34] | Kacperczyk, M., & Schnabl, P. (2010). When safe proved risky: Commercial paper during the financial crisis of 2007-2009. Journal of Economic Perspectives, 24 (1), 29-50. |
| [35] | Levitin, A. &. (2011). “Explaining the Housing Bubble,” University of Pennsylvania Institute for Law & Economics, 10-15. |
| [36] | Marcin, K., & Schnabl, P. (2011). Implicit guarantees and risk taking: evidence from money market funds. No. w17321, National Bureau of Economic Research. Retrieved from https://doi.org/10.3386/w17321 |
| [37] | Mark, S., Lewis, P., & Thornhill, A. (2012). Research Methods For Business Students (6th ed.). Harlow: Pearson Education. |
| [38] | Martin, A., Skeie, R. D., & Ernst-Ludwig von Thadden, V. E. (2014). Repo Runs. Review Of Financial Studies, 27, 957-989. |
| [39] |
MF Mutualfunds. (2019, March 3). Retrieved from Mutualfunds. Com: |
| [40] | Ordonez, G.. (2014). Sustainable Shadow Banking. National Bureau of Economic Research. Retrieved from 19022 http://www.nber.org/papers/w19022 |
| [41] | Ordonez, G. (2018). “Sustainable Shadow Banking”. American Economic Journal: Macroeconomics, 10 (1), 1–25. |
| [42] |
Palink, E., & Svoob, A. (2016). Main Causes and Process of Financial Distress. Retrieved from |
| [43] | Pan, L. (2017). Demystifying Asset-Backed Commercial Paper; A Fresh Perspective on Opportunities and Risks. Investment Research. |
| [44] | Plantin, G. (2014). Shadow banking and bank capital regulation. The Review of Financial Studies, 28 (1), 146-175. |
| [45] | Pozar Z., Adrain, T,. Ashcraft, A,. & Boesky, H. (2010) shadow banking Zoltan, 190. |
| [46] |
"OFR Financial Stress Index | Office Of Financial Research". (2019, March 4). Retrieved from Financial research.Gov,: |
| [47] | Russ, W. (2011). Performance Measurement Of Mutual Funds, Hedge Funds, And Institutional Accounts. Annual Review Of Financial Economics, 3, 537-574. |
| [48] | Sahay, A.. (2016, Oct 28). Peeling Saunders’s Research Onion. Retrieved from < https://www.researchgate.net/publication/309488459_Peeling_Saunder's_Research_Onion> |
| [49] | Samuelson, P. (2008). Asymmetric or symmetric time preference and discounting in many facets of economic theory: A miscellany. Journal of Risk and Uncertainty, 37 (2), 107-114. |
| [50] | Shnabl, M. K. and P. (2013). HOW SAFE ARE MONEY MARKET FUNDS ? QUARTERLY JOURNAL OF ECONOMICS, 128 (1), 1073–1122. https://doi.org/10.1093/qje/qjt010 |
| [51] | Swati, G., Mazo, D. G., & Otker-Robe, I. (2012, september). Chasing the shadows: How significant is shadow banking in emerging market. Retrieved from worldbank.org: http://www.worldbank.org |
| [52] | Tobias, A. & Shin, S. H. (2010). Liquidity And Leverage. Journal Of Financial Intermediation, 19, 418-437. |
| [53] | Tobias, Adrian, Adam B. & Ashcraft. (2012). Shadow Banking: A Review of the Literature. Federal Reserve Bank of New York Staff Reports. |
| [54] | Tripathy, P. J. (2013). Secondary Data Analysis: Ethical Issues and Challenges. Iranian Journal of Public Health, 42 (12), 1478-1479. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4441947/ |
| [55] | Valentina, B., & Shin, S. H. (2015). Capital Flows And The Risk-Taking Channel Of Monetary Policy. Journal Of Monetary Economics, 71, 119-132. |
| [56] | 1, Adam, B., Tyler & Ashcraft. (2012, February 1). Defaults and Losses on Commercial Real Estate Bonds during the Great Depression Era. FRB of New York Staff Report. Retrieved from https://ssrn.com/abstract=2002078 or http://dx.doi.org/10 |
| [57] | Zoltan, P., Adrian, T., Ashcraft, A., & Boesky, H.. (2010). Shadow Banking Federal Reserve Bank Of New York Staff Reports. New York: Federal Reserve Bank. |
| [58] | Office of Financial Research. “OFR Financial Stress Index.” OFR, https://www.financialresearch.gov/financial-stress-index/ (accessed Sat. Mar. 16, 2019). |
| [59] | Board of Governors of the Federal Reserve System (US), Institutional Money Funds [WIMFNS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/WIMFNS, March 16, 2019. |
| [60] | Federal Reserve Bank of St. Louis, St. Louis Fed Financial Stress Index [STLFSI], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/STLFSI, March 16, 2019. |
| [61] | “Measuring Financial Market Stress” (https://files.stlouisfed.org/research/publications/es/10/ES1002.pdf) and the related appendix, (https://files.stlouisfed.org/files/htdocs/publications/net/NETJan2010Appendix.pdf). |
APA Style
Muhammad Adnan Khan, Sabahat Rana. (2022). The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations. Journal of Business and Economic Development, 7(3), 71-85. https://doi.org/10.11648/j.jbed.20220703.12
ACS Style
Muhammad Adnan Khan; Sabahat Rana. The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations. J. Bus. Econ. Dev. 2022, 7(3), 71-85. doi: 10.11648/j.jbed.20220703.12
Share This Article
Twitter
Linked In
Facebook
Copy
Download@article{10.11648/j.jbed.20220703.12,
author = {Muhammad Adnan Khan and Sabahat Rana},
title = {The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations},
journal = {Journal of Business and Economic Development},
volume = {7},
number = {3},
pages = {71-85},
doi = {10.11648/j.jbed.20220703.12},
url = {https://doi.org/10.11648/j.jbed.20220703.12},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20220703.12},
abstract = {This research study aims at to discover the effects of evolving concept of the shadow banking system and particularly assessing how the major elements of shadow banking system such as Money Market Mutual Funds, Repurchase Agreements and Asset-Backed Commercial Papers would move to financial market distress. The Shadow banking have major contribution towards the great US financial crisis of 2007-2008 in the form of structural securities of SDOs due to lack of effective regulatory system and If the regulatory mechanism levied by Securities and Exchange Commissions and a stable monetary and fiscal strategies of central bank would be properly practiced, it can provide assistance to overcome the distressing situation of financial market. OLS method applied for analysis and two sample data sets are collected, firstly, for shadow banking system itself taken 29 countries as from the Global Financial Report (2017) and secondly, the outstanding level of time series data of money market mutual funds, repurchase agreements and asset-backed commercial papers in the context of US financial market through secondary data sources. The outcomes appeared as significant that are associated with our arguments given in the literature that through moderating role of regulations risk of financial market distress can be mitigate and the study hypothesis are verified. Hence, research framework proved statistically and a strong regulatory system can reduce the misbalancing situation of financial markets.},
year = {2022}
}
TY - JOUR T1 - The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations AU - Muhammad Adnan Khan AU - Sabahat Rana Y1 - 2022/08/24 PY - 2022 N1 - https://doi.org/10.11648/j.jbed.20220703.12 DO - 10.11648/j.jbed.20220703.12 T2 - Journal of Business and Economic Development JF - Journal of Business and Economic Development JO - Journal of Business and Economic Development SP - 71 EP - 85 PB - Science Publishing Group SN - 2637-3874 UR - https://doi.org/10.11648/j.jbed.20220703.12 AB - This research study aims at to discover the effects of evolving concept of the shadow banking system and particularly assessing how the major elements of shadow banking system such as Money Market Mutual Funds, Repurchase Agreements and Asset-Backed Commercial Papers would move to financial market distress. The Shadow banking have major contribution towards the great US financial crisis of 2007-2008 in the form of structural securities of SDOs due to lack of effective regulatory system and If the regulatory mechanism levied by Securities and Exchange Commissions and a stable monetary and fiscal strategies of central bank would be properly practiced, it can provide assistance to overcome the distressing situation of financial market. OLS method applied for analysis and two sample data sets are collected, firstly, for shadow banking system itself taken 29 countries as from the Global Financial Report (2017) and secondly, the outstanding level of time series data of money market mutual funds, repurchase agreements and asset-backed commercial papers in the context of US financial market through secondary data sources. The outcomes appeared as significant that are associated with our arguments given in the literature that through moderating role of regulations risk of financial market distress can be mitigate and the study hypothesis are verified. Hence, research framework proved statistically and a strong regulatory system can reduce the misbalancing situation of financial markets. VL - 7 IS - 3 ER -
Information
Email: