Explore the vast range of titles available.

Macroprudential policy is increasingly being implementedworldwide, and is mostly applied to banks. A key question is whether this prompts substitution toward nonbank credit. Using two different global data sets on macroprudential measures and different methodologies, including detrended series, panel estimations, and propensity score matching, we find evidence of such substitution. Substitution toward nonbank credit appears to be strongerwhen policy measures are binding and are implemented in economies with well-developed nonbank credit markets. This substitution partially offsets the fall in bank credit, thus dampening the policies’ effect on total credit.

Illiquidity in short-term credit markets during the financial crisis might have severely curtailed the supply of nonbank consumer credit. Using a new data set linking every car sold in the United States to the credit supplier involved in each transaction, we find that the collapse of the asset-backed commercial paper market reduced the financing capacity of such nonbank lenders as captive leasing companies in the automobile industry. As a result, car sales in counties that traditionally depended on nonbank lenders declined sharply. Although other lenders increased their supply of credit, the net aggregate effect of illiquidity on car sales is large and negative. We conclude that the decline in auto sales during the financial crisis was caused in part by a credit supply shock driven by the illiquidity of the most important providers of consumer finance in the auto loan market. These results also imply that interventions aimed at arresting illiquidity in short-term credit markets might have helped contain the real effects of the crisis.

An authoritative guide to the rise of Chinese shadow banking and its systemic implications Shadow Banking in China examines this rapidly growing sector in the Chinese economy, and what it means for your investments. Written by two world-class experts in Chinese banking, including the Chief Advisor to the China Banking Regulatory Commission and former Chairman of the Securities and Futures Commission in Hong Kong, this book is unique in providing true, first-hand perspectives from authorities within the world's largest economy. There is little widely-available information on China's shadow banking developments, and much of it is rife with disparate data, inaccuracies and overblown risks due to definitional and measurement differences. This book clears the confusion by supplying accurate information, on-the-ground context and invaluable national balance sheet analysis you won't find anywhere else. Shadow banking has grown to be a key source of credit in China, and a major component of the economy. This book serves as a primer for analysts and investors seeking real, useful information about the sector to better inform investment decisions. * Discover what's driving the growth of shadow banking in China * Learn the truth about both real and inflated risks * Dig into popular rhetoric and clarify common misconceptions * Access valuable data previously not published in English Despite shadow banking's critical influence on the Chinese economy, there have been very few official studies and even fewer books written on the subject. Understanding China's present-day economy and forecasting its future requires an in-depth understanding of shadow banking and its inter-relationship with the banking system and other sectors. Shadow Banking in China provides authoritative reference that will prove valuable to anyone with financial interests in China.

In 2009, the Federal Reserve subjected nonbank mortgage-originating subsidiaries of bank holding companies (BHCs), but not independent nonbank (INB) mortgage originators, to consumer compliance supervision. We examine the effects of this regulatory change on the pricing and performance of nonbank originations using a sample of conventional, first-lien, amortizing mortgages originated between 2000 and 2015. We find that subsidiary nonbank (SNB) loans, which had a higher probability of default than INB mortgages prior to the policy change, had a lower probability of default following the change. In addition, we identify small but statistically significant decreases in loan interest rates and loan-to-value ratios for SNB mortgages relative to INB mortgages. When we split our sample into prime and subprime mortgages, we find those effects hold for prime mortgages. For subprime mortgages, after the policy change SNB originations had higher interest rates and lower LTV ratios than INB mortgages, with only weakly significant differences in probabilities of default. The findings are robust to several potential confounding effects, including those due to firm entries and exits. Our findings are consistent with BHCs reducing risk shifting in mortgage lending across subsidiaries following their heightened regulatory scrutiny.

To date, descriptive accounts and reform proposals have framed the problems arising from \"shadow banking\" as about the risks of lending and maturity transformation by nonbanks operating outside the guardrails of banking law. But shadow banks engage in the business of investing, not lending, and their ownership interests are often held by traditional banking entities. By ignoring the ownership structure and investment activities of shadow banks, the academic literature has overstated the risks that nonbanks pose to financial stability and underestimated the ability of existing regulatory frameworks to address the information and incentive problems posed by shadow banks.

A central lesson of the global financial crisis is that banks are not the only financial firms that can endanger the broader financial system. The Dodd-Frank Act responded to this reality by empowering a council of financial regulators to designate individual nonbank financial institutions as systemically risky. Although the Financial Stability Oversight Council (FSOC) has exercised this authority only four times, it has occasioned controversy in court, in Congress, and among commentators. And with Donald Trump's 2016presidential victory, FSOC's designation authority is now in danger of being radically altered or terminated completely. This Article defends the FSOC designation scheme, arguing that its critics misunderstand the mechanisms by which it helps to reduce systemic risk outside the banking sector. FSOC designation does not, and cannot, precisely identify firms that could pose a systemic risk to the financial system. FSOC's broad discretion to impose costly sanctions on designated firms instead advances two quite different goals. First, it deters nonbank firms from seeking out systemically risky strategies or activities. Second, it holds financial regulators to account by threatening to intrude on their regulatory turf if they fail to address systemic risk on their own. We term this approach \"regulation by threat\" and suggest that it is appropriate when risks are hard to identify, the perils of mistake are great, and the downsides of misdiagnosis extreme. Moreover, we argue that the council's discretion is better cabined by its structure—which features diverse membership, voting, review, and political safeguards—than by insistence on 'hard look\" judicial review or a cost-benefit requirement for individual designation decisions. The council offers a useful alternative mechanism to standard approaches to regulation.

PurposeThe purpose of this study is to determine the nature of financial inclusion for individuals with various types of disabilities.Design/methodology/approachData from 2015, 2017 and 2019 FDIC Survey of Household Use of Banking and Financial Services was pooled, and binary logistic regressions were used to investigate differences in barriers to financial inclusion (e.g. unbanked) between people with different types of disabilities (e.g. cognitive) and those without such disabilities.FindingsUsing five separate barrier measures, the authors found specific disability types face different barriers to financial inclusion. For example, respondents with cognitive, ambulatory or two or more disabilities were more likely to use nonbank transaction products and alternative financial services. And, those with vision or cognitive disabilities were more likely to be denied or receive reduced credit. When examining aggregate barriers to financial inclusion (total number of barriers faced) respondents with cognitive, ambulatory, hearing or two or more disabilities experienced the lowest degree of financial inclusion in the authors’ dataset.Research limitations/implicationsCausal inference cannot be made due to the cross-sectional nature of the data. The data only covers the US population, and the measurement of disability type could include those with short-term impairments. Further, there may be an omitted variable bias.Practical implicationsBest practices to maximize financial inclusion for those with different disability types should address accessibility issues, bank staff education, financial literacy education and poverty issues. Additional government policies and oversight are also needed to protect and enhance the overall financial inclusion of people with disabilities.Originality/valueTo the best of the authors’ knowledge, this paper is the first to examine the relationship between various barriers to financial inclusion and aggregate barriers to financial inclusion by disability type. Specific disability types are found to face different barriers to financial inclusion.

As exemplified by the dramatic failure ofAIG, insurance companies and their affiliates played a central role in the 2008 global financial crisis. It is therefore not surprising that the Dodd-Frank Act — the United States' primary legislative response to the crisis — contained an entire title dedicated to insurance regulation, which has traditionally been the responsibility of individual states. The most important insurance-focused reforms in Dodd-Frank empower the Federal Reserve Bank to impose an additional layer of regulatory scrutiny on top of state insurance regulation for a small number of \"systemically important\" nonbank financial companies, such as AIG. This Article argues, however, that in focusing on the risk that an individual insurance-focused, nonbank financial company could become systemically significant, Dodd-Frank largely overlooked a second, and equally important, potential source of systemic risk in insurance: the prospect that correlations among individual insurance companies could contribute to or cause widespread financial instability. In fact, this Article argues that there are often substantial correlations among individual insurance companies with respect to both their interconnections with the larger financial system and their vulnerabilities to failure. As a result, the insurance industry as a whole can pose systemic risks that regulation should attempt to identify and manage. Traditional statebased insurance regulation, this Article contends, is poorly adapted to accomplishing this given the mismatch between state boundaries and systemic risks, as well as states' limited oversight of noninsurance financial markets. As such, this Article suggests enhancing the power of the Federal Insurance Office—a federal entity primarily charged with monitoring the insurance industry—to supplement or preempt state law when states have failed to satisfactorily address gaps or deficiencies in insurance regulation that could contribute to systemic risk.

Variation in the responsiveness of firms to corporate tax incentives toward debt finance is important for understanding the presumed effects of the debt bias on macro-financial stability. This holds especially for the difference in responsiveness between banks and non-banks. Using a large cross-country micro panel of consolidated firm accounts, we find relatively large responses for the biggest non-financial companies, although these effects are less pronounced as conditional leverage ratios increase. The smallest effects are found for large banks. Results are largely robust for attenuation bias.