Legal aspects of Shadow Banking

Sadeghi, Mohammad; Bagheri, Mahmoud

Legal aspects of Shadow Banking

Authors

Abstract

Shadow Banking; as an investment method is not only an inseparable part of the banking system but also a competitor for banks and government institutions in terms of financing and supervision. In this line, the increasing impacts of shadow banking led to a wornness situation for regulators on legal function and responsibility of financial and banking system on unsecured investment toward investors. Extension of certain conditions related to shadow banking may create restrictions on formal market, financial stability, and monitory of monitors sectors. Without a doubt, because of the interconnectedness of monetary, banking markets, and capital markets, shadow banking is seeking to expand the scope of unorganized activities. These kinds of activities may make challenges on formal, monetary, and financial regulated markets that finally lead to a critical situation on formal institution markets. Legal and Financial Consequences of shadow banking effects on both investors and regulators who are in charge of the monetary and financial markets and this subject requires the strengthening of legal instruments which are related directly or indirectly at the markets. This article considers economic law principles, the most important issues of shadow banking in terms of the separation of the direct and indirect monetary market, the status of organized and unorganized markets, and legal and exemplary contexts of shadow banking in Iran and views the advantages and challenges of this issue. Finally, it analyzes the effects of economic law.

Keywords

References

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