Financial Architecture and Financial Stability

Posted: 9 Nov 2021

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Ansgar Walther

Imperial College London

Multiple version iconThere are 3 versions of this paper

Date Written: November 2021

Abstract

This article 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 nonbank 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 nonbank intermediaries are immune to runs in an extended version of the Diamond–Dybvig model.

Suggested Citation

Allen, Franklin and Walther, Ansgar, Financial Architecture and Financial Stability (November 2021). Annual Review of Financial Economics, Vol. 13, pp. 129-151, 2021, Available at SSRN: https://ssrn.com/abstract=3957030 or http://dx.doi.org/10.1146/annurev-financial-110217-022851

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

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

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