Financial Architecture and Financial Stability
33 Pages Posted: 14 Jul 2021
Date Written: May 2021
This paper studies the links between financial stability and the architecture of financial systems. We review the existing literature and provide organizing frameworks for analyzing three empirically important aspects of financial architecture: The rise of non-bank financial intermediaries, the regulatory response to these structural changes, and the emergence of complex interbank networks. One of our main new results is a necessary and sufficient condition for whether non-bank intermediaries are immune to runs in an extended version of the Diamond-Dybvig model.
JEL Classification: G01, G21, G23, G28
Suggested Citation: Suggested Citation