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This global handbook provides an up-to-date and comprehensive overview of shadow banking, or market-based finance as it has been recently coined. Engaging in financial intermediary services outside of normal regulatory parameters, the shadow banking sector was arguably a critical factor in causing the 2007-2009 financial crisis. This second volume explores three particular domains of shadow banking. The first domain deals with the macro-economic fundamentals of the respective shadow banking segments: Why do they exist, what problems do they solve and why are some of their embedded risks so persistent? The second domain captures the global dimensions of shadow banking markets, reviewing the particularities and specifics of various shadow banking systems around the world. Volume II concludes with an extensive overview of how the sector has changed since the financial crisis, focusing on regulatory arbitrage, contract imperfection and governance. Closing on unresolved issues and open-ended questions that will no doubt remain prominent in the shadow banking sector for years to come, this handbook is a must-read for professionals and policy-makers within the banking sector, as well as those researching economics and finance.

Nonbank financial institutions. --- Limited service banks --- Nonbank banks --- Nonbanks --- Shadow banking --- Shadow banks --- Banks and banking --- Banks and banking. --- Financial crises. --- Macroeconomics. --- Risk management. --- Banking. --- Financial Crises. --- Macroeconomics/Monetary Economics//Financial Economics. --- Risk Management. --- Insurance --- Management --- Economics --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Crises --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money

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This paper discusses key findings of the Detailed Assessment of Observance on the Insurance Core Principles on South Africa. Insurance regulatory and supervisory regime in South Africa is in transition. Currently, the Financial Services Board (FSB-SA) regulates the nonbanking financial services industry, including the insurance sector, in South Africa. With the goal of achieving a safer financial sector to serve South Africa better, the government has proposed major changes in the financial sector. The four policy objectives are: financial stability, consumer protection and market conduct, financial inclusion, and combating financial crime. Market realities in the insurance sector pose significant regulatory challenges, which are well recognized by the authorities.

Economic development. --- Fiscal policy -- South Africa. --- International monetary fund -- South Africa. --- Finance --- Business & Economics --- International Finance --- Insurance --- Insurance law --- State supervision --- Rules and practice --- International Monetary Fund --- Law, Insurance --- Assurance (Insurance) --- Coverage, Insurance --- Indemnity insurance --- Insurance coverage --- Insurance industry --- Insurance protection --- Mutual insurance --- Underwriting --- Law and legislation --- Internationaal monetair fonds --- International monetary fund --- Commercial law --- Contracts, Aleatory --- Rules and practice&delete& --- Evaluation --- South Africa --- Economic conditions. --- E-books --- Industries: Financial Services --- Business and Financial --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Insurance Companies --- Actuarial Studies --- General Financial Markets: Government Policy and Regulation --- Financial Institutions and Services: Government Policy and Regulation --- Insurance & actuarial studies --- Financial services law & regulation --- Insurance companies --- Financial services --- Financial regulation and supervision --- Insurance supervision --- Financial institutions --- Financial services industry --- Nonbank financial institutions

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This paper discusses findings of the Financial System Stability Assessment for South Africa. South Africa’s financial sector operates in a challenging economic environment. Despite remarkable progress since the end of apartheid in 1994, South Africa still has one of the world’s highest unemployment and income inequality rates. Slow economic growth since 2008 has further aggravated unemployment, real disposable income is stagnant, and households are heavily indebted. Relatively high capital buffers as well as sound regulation and supervision have helped mitigate the risks. Stress tests confirm the capital resiliency of banks and insurance companies to severe shocks but illustrate a vulnerability to liquidity shortfalls.

Political Science --- Law, Politics & Government --- Public Finance --- Monetary policy --- Finance --- Fiscal policy --- Risk management --- Tax policy --- Taxation --- Monetary management --- Government policy --- Insurance --- Management --- Economic policy --- Finance, Public --- Currency boards --- Money supply --- E-books --- Economic development. --- Finance -- South Africa. --- International finance. --- International Monetary Fund -- South Africa. --- International Monetary Fund. --- Monetary policy -- South Africa. --- Banks and Banking --- Finance: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Institutions and Services: General --- Banking --- Financial services law & regulation --- Insurance companies --- Financial sector --- Stress testing --- Liquidity requirements --- Financial institutions --- Financial services --- Nonbank financial institutions --- Financial sector policy and analysis --- Economic sectors --- Banks and banking --- Financial services industry --- Financial risk management --- State supervision --- South Africa

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We present a model in which shadow banking arises endogenously and undermines market discipline on traditional banks. Depositors' ability to re-optimize in response to crises imposes market discipline on traditional banks: these banks optimally commit to a safe portfolio strategy to prevent early withdrawals. With costly commitment, shadow banking emerges as an alternative banking strategy that combines high risk-taking with early liquidation in times of crisis. We bring the model to bear on the 2008 financial crisis in the United States, during which shadow banks experienced a sudden dry-up of funding and liquidated their assets. We derive an equilibrium in which the shadow banking sector expands to a size where its liquidation causes a fire-sale and exposes traditional banks to liquidity risk. Higher deposit rates in compensation for liquidity risk also weaken threats of early withdrawal and traditional banks pursue risky portfolios that may leave them in default. Policy interventions aimed at making traditional banks safer such as liquidity support, bank regulation and deposit insurance fuel further expansion of shadow banking but have a net positive impact on financial stability. Financial stability can also be achieved with a tax on shadow bank profits.

Banks and banking. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Nonbank financial institutions --- Banks and banking --- E-books --- Limited service banks --- Nonbank banks --- Nonbanks --- Shadow banking --- Shadow banks --- Banks and Banking --- Finance: General --- Financial Markets and the Macroeconomy --- Central Banks and Their Policies --- Financial Crises --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Institutions and Services: Government Policy and Regulation --- Portfolio Choice --- Investment Decisions --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Financial services law & regulation --- Asset liquidity --- Liquidity risk --- Financial services --- Asset and liability management --- Financial regulation and supervision --- Bank deposits --- Law and legislation --- Liquidity --- Economics --- Financial risk management --- United States

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Large fiscal financing needs, both in advanced and emerging market economies, have often been met by borrowing heavily from domestic banks. As public debt approached sustainability limits in a number of countries, however, high bank exposure to sovereign risk created a fragile inter-dependence between fiscal and bank solvency. This paper presents a simple model of twin (sovereign and banking) crisis that stresses how this interdependence creates conditions conducive to a self-fulfilling crisis.

Business & Economics --- Economic Theory --- Financial crises. --- Banks and banking. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Finance --- Financial institutions --- Money --- Crises --- Banks and banking --- Bank loans --- Financial crises --- Risk --- Debts, Public --- Econometric models --- E-books --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Economics --- Uncertainty --- Probabilities --- Profit --- Risk-return relationships --- Bank credit --- Loans --- Banks and Banking --- Financial Risk Management --- Money and Monetary Policy --- Public Finance --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- Money Supply --- Credit --- Money Multipliers --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Crises --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Debt Management --- Sovereign Debt --- Economic & financial crises & disasters --- Monetary economics --- Public finance & taxation --- Nonbank financial institutions --- Domestic debt --- Financial services industry --- Argentina