Title: Combination matters: why corporate bonds and shadow banking can threaten financial stability - a Minskyian perspective

Authors: Henri Schneider

Addresses: Leuphana University Lüneburg, Institut für Volkswirtschaftslehre, Universitaetsallee 1, 21335 Lüneburg, Germany

Abstract: This article investigates the systemic risk of the corporate bond market connected with the rise of shadow banking since 2008 in the light of Hyman Minsky's financial instability hypothesis, which considers advanced capitalist economies as inherently unstable and prone to booms and busts. Does today's market for corporate bonds threaten financial stability, especially the shift from commercial banking towards less regulated shadow banking? My goal is to show that this shift in connection with worrisome developments in the corporate bond sector could lead to rising instability in the financial markets. Subsequently, four policy proposals for financial regulation will be evaluated.

Keywords: Minsky; financial instability hypothesis; FIH; financial crisis; corporate debt; financial stability; financialisation.

DOI: 10.1504/IJPEE.2022.124576

International Journal of Pluralism and Economics Education, 2022 Vol.13 No.1, pp.103 - 119

Accepted: 23 Mar 2022
Published online: 28 Jul 2022 *

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