In the shadow of shadow banking: A liquidity perspective

• 成果类型: Article
• 署名作者: Liu, Zehao; He, Ping; Xie, Chengbo
• 署名单位: Renmin University of China; Tsinghua University; Southwestern University of Finance & Economics - China
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE5712
• 发表日期: 2025
• 关键词: model

摘要

Liquidity requirements for commercial banks improve risk-sharing for depositors. Nevertheless, shadow banks, issuing securities with lower liquidity, operate outside such regulatory constraints. In an economy featuring shadow banks with a constant level of liquidity for shadow bank securities, higher liquidity requirements lead to a reduction in aggregate liquidity provision, owing to regulatory arbitrage incentives. Conversely, when the liquidity of shadow bank securities decreases with the market share of shadow banks, the incentive for regulatory arbitrage is reduced and, thus, higher liquidity requirements could enhance aggregate liquidity provision.