Table 5 Key literature on SB and systemic risk
References | Journal/conference | Nature | Main arguments/findings |
|---|---|---|---|
Pellegrini et al. (2017) | Finance Research Letters | Empirical | MMFs listed in the UK have decreased systemic risk during GFC. Average systemic risk is increased by liquidity mismatch over the whole study period, but the risk only decreases during GFC |
Bengtsson (2016) | Journal of Financial Regulation and Compliance | Theoretical | From the perspective of systemic risk, hedge funds and conventional investment funds have several commonalities. Investment funds’ ability to substitute traditional banks’ maturity transformations may be threatened by the instability in funding profiles of the investment funds |
Wymeersch (2017) | EBI Working Paper Series | Theoretical | Banks have been bound to adapt the behaviors, structure, and balance sheet to the risk of participating in the shadow banking market |
Hsu et al. (2013) | CITYPERC Working Paper Series | Theoretical | Several factors, including herd behavior, are creating systemic risk in the European markets. Risk dispersion across the underdeveloped segment of the shadow banking sector has posed China some concentrated risks that have no contribution to the systemic risk |
Tian et al. (2016) | Emerging Markets Finance and Trade | Empirical | Over the 2007–2012 period, trust companies posed the most financial Instability in China and this adverse effect caused the commercial banks the most |
Wei (2015) | Asia Pacific Law Review | Theoretical | Regulators and the market players object to shadow banks’ existence as it generates financial risks. However, commercial banks have enjoyed a large amount of profit generated by the WMPs. So, the Chinese policymakers can formulate a multi-tiered market for loans and an interest rate environment to cure WMPs’ systemic risk |
Hsu et al. (2014) | PERI Working Paper Series | Empirical | Trust companies pose the most systemic risk in the Chinese shadow banking system. The systemic risk posed by banks, insurance companies, and securities companies had insignificant differences. Banks absorbed the most systemic risks, about 85%, in the shadow banking system |