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"Shadow banking--a system of credit creation outside traditional banks--lies at the very heart of the global economy. It accounts for over half of global banking assets, and represents a third of the global financial system. Although the term 'shadow banking' only entered public discourse in 2007, the importance and scope of this system is now widely recognised by the international policy-makers. There is, however, much less consensus on the origins of the shadow banking system, what role it plays in global political economy and the optimal approach to regulating this complex segment of finance. This volume addresses these questions.Shadow Banking is the first study to bring together the insights from financial regulators, practitioners and academics from across the social sciences. The first part traces the evolution and ongoing confusion about the meaning of 'shadow bankin'. The second section draws major lessons about shadow banking as posed by the financial crisis of 2007, providing comparative analyses in the US and Europe, and attempts to establish why shadow banking has emerged and matured to the level of a de facto parallel financial system. Finally, the third part goes beyond current regulatory concerns about shadow banking and explains why it is'here to stay'.This volume is of great importance to political economy, banking and international political economy."--Provided by publisher.

This article examines financial innovation as a source of structural power of finance originally identified by Susan Strange. I build a synthesis based on complex network theory and the field of evolutionary finance which yields a conception of finance as a complex ecological habitat. On the one hand, the interaction between various entities inhabiting the financial system endows this complex habitat with a tangible degree of autonomy vis-à-vis politics, society and economy. On the other hand, the evolutionary process guiding this financial ecology is built on complexity and innovation and hence is fragile. The structural power of finance today, therefore, is necessarily twofold: it manifests the effects of the endeavours (intentional and otherwise) of financial agents; crucially, it also rests on the seemingly boundless ability of the financial system to adapt, change and evolve.

This paper argues that the credit crunch is the result of a particular problem in the world financial system, that is, of the phenomenon of 'liquidity illusion.' At the heart of this still poorly under-stood phenomenon lies the spiral of financial innovation and its effects on systemic liquidity. I examine the political-economic mechanisms that had sustained the illusion of liquidity during the boom years, and the mechanisms which contributed to its evaporation during the ongoing crisis. My analysis demonstrates that that while increased investment inflows have been one of the factors behind the North Atlantic credit boom of 2003-2007, the boom - including housing and securitization bubbles - has disguised the fact that the financial system in Anglo Saxon econ-omies has become progressively illiquid. Drawing on the scholarship of Hyman Minsky, I identify three pillars of the liquidity illusion - Ponzi finance; collective thinking by investors; and the credibility function performed by the credit rating agencies - and examine their role in the un-ravelling of the global liquidity illusion.

This article focuses on the issue of systemic illiquidity as a key component in the financial crises of the late 1990s. The article critically revisits Minsky's financial fragility hypothesis, advancing his insights into the analysis of crises in East Asia, Russia, and the United States in the late 1990s. Three key factors of these crises are identified and explored: financial liberalization, progressive illiquidity, and the debt burdens incurred during the periods of investor euphoria.

A review essay on books by (1) Walden Bello, Nicola Bullard, & Kamal Malhotra (Eds), Global Finance. New Thinking on Regulating Speculative Capital Flows (London: Zed, 2000); (2) Robert J. Shiller, Irrational Exuberance (Princeton, NJ: Princeton U Press, 2000); & (3) Kavaljit Singh, Taming Global Financial Flows: Challenges and Alternatives in the Era of Globalization. A Citizen's Guide (London: Zed, 2000). 20 References.