Ban Publishes Article on Blind Spots in Shadow Banking


Cornel BanAssistant Professor of International Relations and Co-Director of the Global Economic Governance Initiative, published a recent article with Daniela Gabor, Professor of Economics and Macro-Finance at UWE Bristol, on how the international regulatory regime seems to be returning to a benign view of financial innovation despite systematic risks.

Ban’s article, entitled “The State, Inequality and the Politics of Economic Ideas: Three Blind Spots in Shadow Banking,” was published on March 24, 2017 in the LSE Business Review

From the text of the article:

Shadow banking has become a systemic pillar of global finance. A typical map shows a complex network of shadow entities such as highly levered off-balance-sheet vehicles, broker-dealers, private equity firms, money market funds or hedge funds. Yet (large) regulated banks also moved in the shadows, driven by a combination of yield, regulatory and tax arbitrage in order to engage in securitisation (or transformation of loans into securities that could be traded) and repo markets (wholesale markets where financial institutions raise funding using securities as collateral).

Shadow banking has proved to be extremely dangerous. Between 2007 and 2011, it wreaked havoc with global finance and the fiscal sustainability of the nation-state. A solid consensus now connects the Lehman crisis and the European sovereign debt crisis to runs on shadow banking. Yet the growing literature on shadow banking – spanning from economics to law and political science  – shares three blind spots: the state, inequality and the politics of economic ideas. In a recent interdisciplinary forum we tried to speak to these critical but ignored facets of shadow banking.

You can read the entire article here.

Cornel Ban is the author of ten peer-reviewed articles on economic policy strategies in Southern Europe, Eastern Europe and Latin America, professionals and economic policy, the politics of IMF fiscal policy advice and European financial crisis management. His most recent book was published by Oxford University Press and deals with the local adaptation and crisis resilience of global economic paradigms in Spain and Romania. Learn more about him here