School of Social and Political Science

Description

About the talk:

Shadow banking, notorious for its role in the 2008 financial crisis, remains a key component of the global financial system. It is a vast market worth $217 trillion, encompassing the activities of hedge funds, asset managers and dealers providing credit and issuing deposit substitutes outside of banking regulation and the safety net of state-backed insurance schemes. Traditionally, its origins are traced to private sector innovations, which the US Federal Reserve was forced to accommodate when they began bailing out ‘too big to fail’ markets in the early 1970s. This paper instead identifies the origins of the shadow banking system with an earlier postwar period (1948-1966) when US government agencies were actively facilitating the growth of unregulated deposit substitutes. We present the goals of our historical comparative project, as well as initial findings from archival research at the Library of Congress regarding controversies over repurchase agreements in the Federal Reserve in the early 1950s. We suggest the original concept of “rule evasion from above” and theorize the motivations and political dynamics at work when regulators intentionally undermine the very rules they are supposed to enforce.

About the speakers:

Nathan Coombs is Senior Lecturer in Economic Sociology and co-director of the Centre for Science, Knowledge and Policy in the School of Social and Political Science, University of Edinburgh. His research focuses on central banking and financial regulation, particularly knowledge and agency in the field of financial stability governance. He is a founding editor of the journal Finance and Society published by Cambridge University Press.

Matthias Thiemann is Full Professor of European Public Policy in the Centre for European Studies and Comparative Politics at Sciences Po, Paris. He published a book on the Growth of Shadow Banking with Cambridge University Press in 2018 and more recently, in 2024, a book on Taming the Cycles of Finance about post-financial crisis regulation, also with Cambridge University Press. He has published research on European shadow banking in American Journal of Sociology (2017).

About the series:

The Sociology Speaker Series presents the latest research by academic staff members and distinguished guests from across the United Kingdom and beyond. We normally meet on Wednesdays during the semester. Registration is free and open to all University of Edinburgh students and staff. Organised by Lisa McCormick (lisa.mccormick@ed.ac.uk).