Original scientific paper
https://doi.org/10.1080/1331677X.2019.1633943
Macro determinants of shadow banking in Central and Eastern European countries
Constantin-Marius Apostoaie
orcid.org/0000-0002-3032-5426
; Department of Finance, Money and Public Administration, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iaşi, Iaşi, Romania
Irina Bilan
; Department of Finance, Money and Public Administration, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iaşi, Iaşi, Romania
Abstract
Our study aims to quantitatively assess some of the determinants of shadow banking dynamics in 11 European Union (E.U.) countries from Central and Eastern Europe (C.E.E.) over the period 2004–2017. Using panel data estimation techniques and a quarterly data set compiled from several publicly available data sources, we alternatively evaluate the impact of six macroeconomic and financial variables on two dependent variables corresponding to two different measures of the shadow banking sector, namely the broad one (including all non-monetary financial institutions, except insurance corporations and pension funds) and the narrow one (excluding from the above one the investment funds, other than money market funds [M.M.F.]). Our findings confirm that shadow banking is sensitive to overall macroeconomic conditions and that economic growth positively influences the expansion of this segment of the financial sector. In addition, a higher demand for funds from institutional investors, which also reveals a more developed financial system, supports the expansion of the shadow banking sector. Moreover, in a low interest rate environment, the search for yield makes investors turn to shadow banks, while the development of the shadow banking sector is also found to be complementary to the development of the rest of the financial system, in particular, traditional banks.
Keywords
shadow banking; Central and Eastern European (C.E.E.) countries; macroeconomic and financial determinants; panel data estimation techniques
Hrčak ID:
229826
URI
Publication date:
9.2.2021.
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