Financial Architecture and Financial Stability

33 Pages Posted: 14 Jul 2021

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Ansgar Walther

Imperial College London; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: May 2021

Abstract

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

Allen, Franklin and Walther, Ansgar, Financial Architecture and Financial Stability (May 2021). CEPR Discussion Paper No. DP16204, Available at SSRN: https://ssrn.com/abstract=3886646

Franklin Allen (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Ansgar Walther

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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