Shadow Banking System or Non-Banking Financial Institutions? Two concepts in the shadows
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Abstract
There is now some consensus that the collapse of Lehman Brothers was triggered by a run on the Shadow Banking System in 2008 (Pozsar, et al., 2010; Gorton and Metrick, 2012; Vasudevan, 2018). The relevance of this assent remains to this day, not only was it maintained after the crisis, but it has grown by virtue of the vindication that this concept has had through the institutional discourse renaming it as Non-Banking Financial Institutions, a name that can commonly be found in the economic literature, to leave behind some pejorative vestige about it.
However, this paper aims to make visible that it was not a simple change in the way of referring to it, but that it has deeper implications. Under the international institutional discourse, it went from being named the Shadow Banking System, before, during and immediately after the collapse of Lehman Brothers, to being pointed out as the culprit of the crisis, to the Non-Banking Financial Institutions. Fifteen years later, non-bank investors were seen as a necessity to access credit, to obtain cheap financing for banks, which in turn translates into cheap credit for households. Consequently, there are incentives to allow it to be part of the financial ecosystem.
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References
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