Shadow banks ‘interfere’ with macro-pru – paper

Shadow bankers

Financial regulation should be based on the economic function of an institution, rather than its legal definition, argues a working paper published by the Central Bank of Luxembourg.

Patrick Fève and Olivier Pierrard examine the effect macro-prudential policy has on non-financial depository institutions by inputting US data into a dynamic stochastic general equilibrium model, in their paper Financial Regulation and Shadow Banking: A Small-Scale DSGE Perspective.

Looking at increases in the ca

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