Quarterly Journal of Austrian Economics

Facebook icon
LinkedIn icon
Twitter icon
A
A
Home | Mises Library | The Role of Shadow Banking in the Business Cycle

The Role of Shadow Banking in the Business Cycle

  • QJAE_20141027_0_0.jpg
0 Views

Tags Business CyclesMoney and Banking

03/02/2017Arkadiusz Sieroń

 

Quarterly Journal of Austrian Economics 19, no. 4 (Winter 2016)

ABSTRACT: The aim of this article is to examine the impact of shadow banking on credit expansion and the business cycle. I focus on two main functions of the shadow banking system: securitization and collateral-intermediation. The former enables traditional banks to expand their credit activity, while the latter allows the shadow banks to create new money by themselves. Shadow banking shows that non-banking institutions can also conduct credit expansion and generate the business cycle. Thus, the Austrian business cycle theory should be extended to take into account the way in which shadow banking activity changed the conduct of credit expansion.

KEYWORDS: shadow banking, business cycle, credit expansion, Austrian business cycle theory, securitization, collateralization
JEL CLASSIFICATION: B53, E32, E51, G21, G23
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Cite This Article

Sieroń, Arkadiusz, "The Role of Shadow Banking in the Business Cycle," Quarterly Journal of Austrian Economics 19, no. 4 (Winter 2016): 309–329

When commenting, please post a concise, civil, and informative comment. Full comment policy here.
Shield icon interview