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The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations

Received: 1 July 2022     Accepted: 15 August 2022     Published: 24 August 2022
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Abstract

This research study aims at to discover the effects of evolving concept of the shadow banking system and particularly assessing how the major elements of shadow banking system such as Money Market Mutual Funds, Repurchase Agreements and Asset-Backed Commercial Papers would move to financial market distress. The Shadow banking have major contribution towards the great US financial crisis of 2007-2008 in the form of structural securities of SDOs due to lack of effective regulatory system and If the regulatory mechanism levied by Securities and Exchange Commissions and a stable monetary and fiscal strategies of central bank would be properly practiced, it can provide assistance to overcome the distressing situation of financial market. OLS method applied for analysis and two sample data sets are collected, firstly, for shadow banking system itself taken 29 countries as from the Global Financial Report (2017) and secondly, the outstanding level of time series data of money market mutual funds, repurchase agreements and asset-backed commercial papers in the context of US financial market through secondary data sources. The outcomes appeared as significant that are associated with our arguments given in the literature that through moderating role of regulations risk of financial market distress can be mitigate and the study hypothesis are verified. Hence, research framework proved statistically and a strong regulatory system can reduce the misbalancing situation of financial markets.

Published in Journal of Business and Economic Development (Volume 7, Issue 3)
DOI 10.11648/j.jbed.20220703.12
Page(s) 71-85
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2022. Published by Science Publishing Group

Keywords

Repurchase Agreement, Shadow Banking System, Shadow Banking Regulations

References
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    Muhammad Adnan Khan, Sabahat Rana. (2022). The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations. Journal of Business and Economic Development, 7(3), 71-85. https://doi.org/10.11648/j.jbed.20220703.12

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    ACS Style

    Muhammad Adnan Khan; Sabahat Rana. The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations. J. Bus. Econ. Dev. 2022, 7(3), 71-85. doi: 10.11648/j.jbed.20220703.12

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    AMA Style

    Muhammad Adnan Khan, Sabahat Rana. The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations. J Bus Econ Dev. 2022;7(3):71-85. doi: 10.11648/j.jbed.20220703.12

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  • @article{10.11648/j.jbed.20220703.12,
      author = {Muhammad Adnan Khan and Sabahat Rana},
      title = {The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations},
      journal = {Journal of Business and Economic Development},
      volume = {7},
      number = {3},
      pages = {71-85},
      doi = {10.11648/j.jbed.20220703.12},
      url = {https://doi.org/10.11648/j.jbed.20220703.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20220703.12},
      abstract = {This research study aims at to discover the effects of evolving concept of the shadow banking system and particularly assessing how the major elements of shadow banking system such as Money Market Mutual Funds, Repurchase Agreements and Asset-Backed Commercial Papers would move to financial market distress. The Shadow banking have major contribution towards the great US financial crisis of 2007-2008 in the form of structural securities of SDOs due to lack of effective regulatory system and If the regulatory mechanism levied by Securities and Exchange Commissions and a stable monetary and fiscal strategies of central bank would be properly practiced, it can provide assistance to overcome the distressing situation of financial market. OLS method applied for analysis and two sample data sets are collected, firstly, for shadow banking system itself taken 29 countries as from the Global Financial Report (2017) and secondly, the outstanding level of time series data of money market mutual funds, repurchase agreements and asset-backed commercial papers in the context of US financial market through secondary data sources. The outcomes appeared as significant that are associated with our arguments given in the literature that through moderating role of regulations risk of financial market distress can be mitigate and the study hypothesis are verified. Hence, research framework proved statistically and a strong regulatory system can reduce the misbalancing situation of financial markets.},
     year = {2022}
    }
    

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    T1  - The Impact of Shadow Banking System on Financial Market Distress; Moderating Role of Regulations
    AU  - Muhammad Adnan Khan
    AU  - Sabahat Rana
    Y1  - 2022/08/24
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    N1  - https://doi.org/10.11648/j.jbed.20220703.12
    DO  - 10.11648/j.jbed.20220703.12
    T2  - Journal of Business and Economic Development
    JF  - Journal of Business and Economic Development
    JO  - Journal of Business and Economic Development
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    AB  - This research study aims at to discover the effects of evolving concept of the shadow banking system and particularly assessing how the major elements of shadow banking system such as Money Market Mutual Funds, Repurchase Agreements and Asset-Backed Commercial Papers would move to financial market distress. The Shadow banking have major contribution towards the great US financial crisis of 2007-2008 in the form of structural securities of SDOs due to lack of effective regulatory system and If the regulatory mechanism levied by Securities and Exchange Commissions and a stable monetary and fiscal strategies of central bank would be properly practiced, it can provide assistance to overcome the distressing situation of financial market. OLS method applied for analysis and two sample data sets are collected, firstly, for shadow banking system itself taken 29 countries as from the Global Financial Report (2017) and secondly, the outstanding level of time series data of money market mutual funds, repurchase agreements and asset-backed commercial papers in the context of US financial market through secondary data sources. The outcomes appeared as significant that are associated with our arguments given in the literature that through moderating role of regulations risk of financial market distress can be mitigate and the study hypothesis are verified. Hence, research framework proved statistically and a strong regulatory system can reduce the misbalancing situation of financial markets.
    VL  - 7
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Author Information
  • Department of Management Science, National University of Modern Languages, Islamabad, Pakistan

  • Department of Management Science, National University of Modern Languages, Islamabad, Pakistan

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