Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98900
Authors: 
Gornicka, Lucyna
Year of Publication: 
2014
Series/Report no.: 
Tinbergen Institute Discussion Paper 14-035/VI/DSF74
Abstract: 
Bank holding companies (BHCs) invest in risky projects through bank entities or sell projects for a fee, thus engaging in shadow banking. BHCs can increase their fee income by guaranteeing sold projects with a recourse to the bank's balance sheet. When the expected guarantee repayments depend on total bank proceeds (high capital requirements), BHCs have incentives to increase their bank investments to raise the demand for offbalance projects. The amount of credit in the economy increases, bank defaults are more frequent, and the costs of deposit insurance increase. BHCs with large banks offer higher guarantees than BHCs with small banks, and they dominate the shadow banking sector.
Subjects: 
shadow banking
implicit recourse
special purpose vehicles
JEL: 
G21
G23
G28
Document Type: 
Working Paper

Files in This Item:
File
Size
787.21 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.