What are the advantages of the shadow banking industry

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Reference no: EM132186788

Instructions & Questions:

Read the HBR case, and prepare a written memo response addressed to me. Answer the following questions a concisely as possible. Restate each question, followed by your response, in the same order as presented.

Cite sources used (including the HBR case, and also any other materials you research in helping you answer the questions).

The assignment must be submitted through Blackboard ONLY in MS-Word format (no PDF or alternative formats; they will not be graded).

1. Explain the unique aspects of the shadow banking business model.

a. What types of institutions comprisethis industry?

b. What is maturity and liquidity transformation?

c. What is the funding profile of these typesof institutions?

d. Why does shadow banking exist?

e. What gaps does it fill in the economy?

2. What are the advantages of the shadow banking industry? What are the risks? How can they be mitigated?

3. Should the shadow banking industry be more comprehensively regulated, and why/why not?

4. GE Capital:

f. In your view, whyis (is not) GE Capital a shadow bank? Why should the market/Reddy (Sifnos) care about such acharacterization?

g. What does GE Capital's historical ROE suggest about the profit potential for nonbank financialinstitutions vis-à-vis traditional commercial banks?

h. Why did GE initiate the GE Capital Exit plan? Was it successful? What would be the impact ifGE successfully petitions its SIFI designation?

i. How much equity is tied up in GE Capital's capital conservation buffer?

Reference no: EM132186788

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