Board of Governors of the Federal Reserve System
NBER Working Papers and Publications
|November 2013||Shadow Banking and the Funding of the Nonfinancial Sector|
in Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, Charles R. Hulten and Marshall B. Reinsdorf, editors
I show how to use data from the Financial Accounts of the United States to estimate how much funding of nonfinancial businesses, households, and governments is provided by the domestic shadow banking system. I define the shadow banking system as the set of entities and activities that provide short-term funding outside of the traditional commercial banking system, but I do not equate all nonbank funding with shadow banking. My results suggest that at the end of 2008, domestic shadow-bank funding of the nonfinancial sector was an important, but fairly modest source of funding relative to that provided by more traditional funding sources such as commercial banks, insurance companies, and pension funds. However, my results suggest that domestic shadow banking played a large role in the inc...