The Growth of Shadow Banking

Matthias Thiemann is Assistant Professor at the Centre d'études Européens, Sciences Po Paris.

• 1. States and the regulation of a globalized finance; 2. The ABCP-market at the heart of shadow banking and the financial crisis; 3. How to explain the absence of regulatory action on shadow banking; 4. The transformation of US financial markets since the 1960s and the emergence and growth of the ABCP market; 5. In the shadow of Basel; 6. Converging procedures or standards? The challenge of the IASC and domestic pathways to SIC 12; 7. Steering finance towards prudence – the role of banking regulators in the governance of compliance decisions; 8. The fate of the bank-based shadow banking system post-crisis; 9. Changing the façade, but not the structure: the continuing threat of shadow banking; References; Index.

'Ten years after the Great Financial Crisis, with regulations remaining mostly unchanged, this book offers a new paradigm for designing financial regulation. Thiemann situates the rise of shadow banking in ill-designed and often highly fragmented regulatory structures - an ideal breeding ground for regulatory arbitrage. Based on a careful comparative analysis of accounting governance in several countries, he argues for greater proximity of regulators to the regulated and a diversity of perspectives to avoid cognitive capture. Even more daring, Thiemann argues that regulators should not fall for the demand by the industry for certainty but instead should force regulatory uncertainty on the financial engineers to keep them on course. When the old regulatory structure inevitably fails us again, we will be better prepared to put a new regime in place and this book offers a new, empirically grounded, strategy.' Katharina Pistor, Edwin B. Parker Professor of Comparative Law, Columbia Law School