The Repo as a Part of Shadow Banking. An Empirical and Regulatory Discussion

Scientific Essay from the year 2014 in the subject Economics - Macro-economics, general, grade: 1,5, University of Innsbruck (Banking and Finance), language: English, abstract: Repos are not only one of the financial instruments with crucial importance for funding. They primarily played a significant role to the recent financial crisis as well. Hence, the question is, whether Basel III and the Dodd-Frank Act successfully mitigate instabilities in repo markets.
Within this analysis and by reviewing key studies, I am going to explain two statements: Firstly, how Gorton and Metrick (2012) empirically verified that the repo functioned as a crisis trigger, and secondly, how Valderrama (2010) modeled an economic framework to deduce several constrictions for regulators. These researches build the base for the evaluation of repo regulations. I explain why capital requirements and CCPs are the most effective preventive policies to reduce both counterparty credit risk and systemic liquidity risk associated with repos. Under a libertarian evaluation approach, specifically the CCP framework constitutes an effective element and starting point for regulatory haircuts and liquidity ratios.

Product details

• Authors: Sebastian Bieder
• Publisher: Grin Verlag
• Languages: English
• Product format: Paperback / Softback
• Released: 31.07.2015
• EAN: 9783668004306
• ISBN: 978-3-668-00430-6
• No. of pages: 72
• Dimensions: 148 mm x 210 mm x 4 mm
• Weight: 118 g
• Illustrations: 3 Farbabb.
• Series: Akademische Schriftenreihe Bd. V301171; Akademische Schriftenreihe Bd. V301171
• Subject: Social sciences, law, business > Business > Economics