ABSTRACT
This book defined the range of shadow banking on broad and narrow foundations. Broad shadow banking is financial intermediation outside the traditional banking system, while narrowly defined shadow banking has our four special characteristics: maturity mismatch, liquidity risk, credit transfer, and high leverage. Broadly defined shadow banking has no inevitable negative effect on macroeconomic stability. Rather, it is the narrowly defined type that can spark a systemic crisis. These require stronger safeguards for their risk and closer regulation.
