Do shadow banks create money? 'Financialisation' and the monetary circuit

Michell, J. (2016) Do shadow banks create money? 'Financialisation' and the monetary circuit. Working Paper. UWE Economics Working Paper Series. Available from:

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The rise of the shadow banking system is viewed throught the lens of Graziani's Monetary Theory of Production. Graziani's categories of 'initial finance' and 'final finance' are used to analyse the new forms of credit created in the shadow banking sector. It is argued that the accumulation of leverage in the shadow banking system and the creation of credit money by the traditional banking sector are symbiotic processes. While Graziani's triangular debtor-bank-creditor relationship remains central, the circuit operates in a perverse form in which household debt is stored on the balance sheets of shadow banks, allowing the banking system to break the historical connection between money creation and productive activity.

Item Type:Report or Working Paper (Working Paper)
Uncontrolled Keywords:shadow banks, money, monetary circuit, Graziani
Faculty/Department:Faculty of Business and Law > Department of Accounting, Economics and Finance
ID Code:28552
Deposited By: Dr J. Michell
Deposited On:30 Mar 2016 14:40
Last Modified:19 May 2017 05:43

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