+7 925 966 4690, 9am6pm (GMT+3), Monday – Friday
ИД «Финансы и кредит»






Finance and Credit

Non-banking financial intermediation and phenomena of shadow money in modern economy

Vol. 27, Iss. 8, AUGUST 2021

Received: 27 May 2021

Received in revised form: 10 June 2021

Accepted: 24 June 2021

Available online: 30 August 2021


JEL Classification: E41, E42, E51, E52

Pages: 1694–1709


Vladimir K. BURLACHKOV Institute of Economics of Russian Academy of Sciences, Moscow, Russian Federation


Subject. The article addresses the non-banking financial intermediation (shadow banking system) as it is successfully expanding nowadays both in developed countries and emerging economics.
Objectives. The study aims at conducting a comprehensive analysis of the specifics of non-banking financial intermediation, revealing its impact on economic agents’ activities, causes and consequences, and elaborating the methodological framework for effectiveness of modern monetary policy.
Methods. I employ methods of scientific abstraction, induction, deduction, synthesis, and comparative analysis.
Results. In the modern national economy, along with the money, created by the central bank and commercial banks, there are highly liquid financial instruments called shadow money. The scope of its application is shadow banking (financial intermediation) outside the banking system. The use of shadow money is caused by high demand for credit resources.
Conclusions. The high activity of shadow banking and increased turnover of shadow money resulted from a transfer to Basel standards of banking regulation in the 1990s, which affected the lending activity of commercial banks. Under these conditions, the demand for loans provided by non-bank credit and financial institutions increased. The market of non-bank credit products was formed. However, the process of lending in the shadow banking is associated with high risks and non-stability of shadow money, widely used in this sphere.

Keywords: shadow banking, shadow money, money demand, money supply, money creation


  1. Murau S., Pforr T. Private debt as shadow money? Conceptual criteria, empirical evaluation and implications for financial stability. Philadelphia, Private Debt Project, 2020. URL: Link
  2. Gabor D., Vestergaard J. Towards a theory of shadow money. URL: Link
  3. Pozsar Z. Shadow Banking: The Money View. Office of Financial Research Working Paper, 2014, no. 14-04, 71 p. URL: Link
  4. Ricks M. The Money Problem. Rethinking Financial Regulation. The University of Chicago Press, 2016, 336 p.
  5. Gorton G., Metrick A. et al. Regulating the shadow banking system. Brooking Papers on Economic Activity, 2010, pp. 261–312.
  6. Michell J. Do shadow banks create money? ‘Financialisation’ of the monetary circuit. Metroeconomica, 2016, vol. 68, iss. 2, pp. 354–377. URL: Link
  7. Helgadóttir O. Banking Upside Down: The implicit politics of shadow banking expertise. Review of international Political Economy, 2016, vol. 23, iss. 6, pp. 915–940. URL: Link
  8. Lysandrou Ph., Nesvetailova A. The role of shadow banking entities in the financial crisis. A disaggregated view. Review of International Political Economy, 2014, vol. 22, iss. 2, pp. 257–279. URL: Link
  9. Nesvetailova A. A crisis of the overcrowded future: Shadow banking and the political economy of financial innovation. New Political Economy, 2014, vol. 20, iss. 3, pp. 431–453. URL: Link
  10. Mehrling P. Elasticity and Discipline in the Global Swap Network. International Journal of Political Economy, 2015, vol. 44, iss. 4, pp. 311–324. URL: Link
  11. Moe T.G. Shadow banking: Policy challenges for central banks. Levy Economic Institute Working Paper, 2014, vol. 802. URL: Link
  12. Ricks M. Money and (shadow) banking: A thought experiment. Review of Banking and Financial Law, 2012, pp. 731–748.
  13. Sunderam A. Money creation and the shadow banking system. Review of Financial Studies, 2015, vol. 28, no. 4, pp. 939–977.
  14. Sissoko C. The legal foundations of financial collapse. Journal of Financial Economic Policy, 2010, vol. 2, no. 1, pp. 5–34.
  15. Thiemann M. In the shadow of Basel: How competitive politics bred the crisis. Review of International Political Economy, 2014, vol. 21, iss. 6, pp. 1203–1239.
  16. Sgambati S. The art of leverage: A study of bank power, money-making and debt finance. Review of International Political Economy, 2019, vol. 26, iss. 2, pp. 287–312. URL: Link
  17. Ban C., Gabor D. The political economy of shadow banking. Review of International Political Economy, 2016, vol. 23, iss. 6, pp. 901–914.
  18. Wullweber J. Money, State, Hegemony: A political ontology of money. New Political Science, 2019, vol. 41, iss. 2, pp. 313–328. URL: Link
  19. Moreira A., Savov A. The Macroeconomics of Shadow banking. The Journal of Finance, 2017, vol. 72, iss. 6, pp. 2381–2432. URL: Link
  20. Bryan D., Rafferty M., Wigan D. Politics, time and space in the era of shadow banking. Review of International Political Economy, 2016, vol. 23, iss. 6, pp. 941–966. URL: Link
  21. He D., McCauley R. Eurodollar banking and currency internationalisation. BIS Quarterly Review, 2012, June issue. URL: Link

View all articles of issue


ISSN 2311-8709 (Online)
ISSN 2071-4688 (Print)

Journal current issue

Vol. 28, Iss. 6
June 2022