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Is shadow banking really akin to banking? A critical analysis in light of monetary theory

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  • Rudy Bouguelli

Abstract

This paper purports to show that a very specific theory of money underlies the way in which shadow banking is understood by most economists as well as the regulatory changes that arises from their understanding of the phenomenon. It demonstrates that the “shadow banking” metaphor implicitly relies on an erroneous conception of banking according to which banks are mere intermediaries of loanable funds. An alternative conception of shadow banking is proposed, based on the theory of endogenous money, where banks play a unique and very special role. The paper provides another comprehension of the purpose of the shadow banking system within the overall financial system, which leads to quite different regulatory proposals.

Suggested Citation

  • Rudy Bouguelli, 2020. "Is shadow banking really akin to banking? A critical analysis in light of monetary theory," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 43(1), pages 1-27, January.
    • Handle: RePEc:mes:postke:v:43:y:2020:i:1:p:1-27
    DOI: 10.1080/01603477.2019.1684826
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    Cited by:

    1. Ridoy Deb Nath & Mohammad Ashraful Ferdous Chowdhury, 2021. "Shadow banking: a bibliometric and content analysis," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-29, December.
    2. Thomas Lagoarde-Segot, 2020. "Financing the Sustainable Development Goals," Sustainability, MDPI, vol. 12(7), pages 1-22, April.
    3. Laurence Scialom & Gaëtan Le Quang & Thomas Lagoarde Segot, 2024. "Sustainable economic policies: exploring the effects of ecosystemic macroprudential regulations," EconomiX Working Papers 2024-28, University of Paris Nanterre, EconomiX.

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