Shadow Banking: Economics and Policy
The talk will review shadow banking: what is its economic value and how does it cater to various demands. Since there is much confusion about what shadow banking is, it will first define shadow banking as “all financial activities, except traditional banking, which require a private or public backstop to operate”. Backstops can come in the form of franchise value of a bank or insurance company, a government guarantee, or a legal privilege. The need for a backstop is a crucial feature of shadow banking and distinguishes it from the usual intermediated capital market activities, such as market-making, broking and underwriting, and related entities, such as custodians, hedge funds, and investment companies. The talk will then focus on two important shadow banking functions: securitization – to create safe assets, and collateral intermediation – to help reduce counterparty risks and facilitate secured transactions. After describing the operations and reviewing the economics and demand factors behind these two functions, the talk will review the systemic risks that can arise from them. It then discusses associated policy priorities, both to reduce spillovers from the shadow banking system to the main banking system and to allow for reduced procyclicality and systemic risk within the shadow banking system.
Stijn ClaessensFederal Reserve Board
Stijn Claessens is Senior Adviser in the Division of International Finance of the Federal Reserve Board. Mr. Claessens, a Dutch national, holds a Ph.D. in business economics from the Wharton School of the University of Pennsylvania and M.A. from Erasmus University, Rotterdam. He started his career teaching at the New York University business school and also taught at the University of Amsterdam. He has worked for sixteen years at the World Bank in various positions, ending as Senior Adviser in the Financial and Private Sector Vice-Presidency. From 2007-2014, he was Assistant Director in the Research Department of the International Monetary Fund. His policy and research interests are in finance, including corporate governance, risk management, globalization, and business and financial cycles. Over his career, Mr. Claessens has provided policy advice to many countries. His research has been published in many journals and he has written and edited several books. He is an associate editor at the IMF Economic Review and other journals, and a CEPR fellow.
Finance and Growth – What Have We Learned
The talk will discuss the findings of the finance and growth literature over the past two decades and point to some recent findings and a rethinking of financial sector challenges post-crisis.
Thorsten BeckCass Business School
Thorsten Beck is professor of banking and finance at Cass Business School in London. He is also a research fellow of the Centre for Economic Policy Research (CEPR) and the CESifo. He was professor of economics from 2008 to 2014 at Tilburg University and the founding chair of the European Banking Center from 2008 to 2013. Previously he worked in the research department of the World Bank and has also worked as consultant for – among others - the European Central Bank, the BIS, the IMF, the European Commission, and the German Development Corporation. His research, academic publications and operational work have focused on two major questions: What is the relationship between finance and economic development? What policies are needed to build a sound and effective financial system? Recently, he has concentrated on access to financial services, including SME finance, as well as on the design of regulatory and bank resolution frameworks. In addition to numerous academic publications in leading economics and finance journals, he has co-authored several policy reports on access to finance, financial systems in Africa and cross-border banking. His country experience, both in operational and research work, includes Bangladesh, Bolivia, Brazil, China, Colombia, Egypt, Mexico, Russia and several countries in Sub-Saharan Africa. In addition to presentation at numerous academic conferences, including several keynote addresses, he is invited regularly to policy panels across Europe. He holds a PhD from the University of Virginia and an MA from the University of Tübingen in Germany.
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* In support of global green initiative, there will not be printed conference materials. The papers will be linked to the Program when they are received.
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