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Financial Architecture and Financial Stability

Author

Listed:
  • Franklin Allen

    (Finance Department, Business School, Imperial College London, London SW7 2AZ, United Kingdom)

  • Ansgar Walther

    (Finance Department, Business School, Imperial College London, London SW7 2AZ, United Kingdom)

Abstract

This article studies the links between financial stability and the architecture of financial systems. We review the existing literature and provide organizing frameworks for analyzing three empirically important aspects of financial architecture: the rise of nonbank financial intermediaries, the regulatory response to these structural changes, and the emergence of complex interbank networks. One of our main new results is a necessary and sufficient condition for whether nonbank intermediaries are immune to runs in an extended version of the Diamond-Dybvig model.

Suggested Citation

  • Franklin Allen & Ansgar Walther, 2021. "Financial Architecture and Financial Stability," Annual Review of Financial Economics, Annual Reviews, vol. 13(1), pages 129-151, November.
    • Handle: RePEc:anr:refeco:v:13:y:2021:p:129-151
    DOI: 10.1146/annurev-financial-110217-022851
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    Citations

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    Cited by:

    1. Iñaki Aldasoro & Sebastian Doerr, 2023. "Who borrows from money market funds?," BIS Quarterly Review, Bank for International Settlements, December.
    2. Gu, Chao & Monnet, Cyril & Nosal, Ed & Wright, Randall, 2023. "Diamond–Dybvig and beyond: On the instability of banking," European Economic Review, Elsevier, vol. 154(C).
    3. Krinichansky, Konstantin & Yurevich, Maksim, 2023. "Finance and growth: Nonlinearity and structural shifts," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 72, pages 5-22.
    4. Jiaji An & He Di, 2024. "How Can Financial Innovation Curb Carbon Emissions in China? Exploring the Mediating Role of Industrial Structure Upgrading from a Spatial Perspective," Sustainability, MDPI, vol. 16(11), pages 1-20, May.

    More about this item

    Keywords

    banks; non-bank intermediaries; financial crises; networks; contagion; regulation;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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