Shadow banking a sea of complixities

Marie-France BAUD Confrontations Europe [vc_btn title= »Download the article » style= »outline » color= »blue » align= »right » i_icon_fontawesome= »fa fa-file-pdf-o » add_icon= »true » link= »url:http%3A%2F%2Fprod.confrontations.org%2Fwp-content%2Fuploads%2F2016%2F03%2FRevue-107-Shadow-banking-a-sea-of-complexities-p25.pdf||target:%20_blank »] Concerns are being raised about the role of shadow banking in the array of new instruments  for financing the economy. Marie-France Baud reports. A new animal has appeared in the financial jungle: shadow banking (SB). The term was coined by Paul McCulley, an American economist and managing director of investment management company PIMCO. It carries pejorative connotations and refers to the intermediation chain set up by and for banks to boost their business through non-banking investment vehicles, channels and structures with a high leverage effect. To put it more simply, according to the Financial Stability Board, shadow banking is “credit intermediation involving entities and/or activities outside the regular banking system.” In fact, there is a broad spectrum of such entities: finance companies, securitisation vehicles, mortgage and consumer lending companies and certain types of investment funds