tailieunhanh - Parallel banking system: Opportunities and challenges

The main aim of this article is to explicitly present what the parallel banking system is and its activities. The first part of the paper focuses on how this banking system could support real economy and contribute to the regional (and the wider) growth by operating supplementary to the systemic banking system. A special reference is done on the regulation frameworks that are applied on those banks in European Union and in United States. At this point, it is underlined the importance of the appropriate implementation of the proportionality principle by regulators so as to avoid the excessive burden of small regional banks with unnecessary regulation costs. Challenges that local banks may face during their operation and factors that affect the health of regional and cooperative banks are pointed out, as well. They are also presented significant sources of finance from which community banks may raise capital to fund their activities. Moreover, possible strategies that local banks may follow in order to improve their efficiency and strengthen their role in the banking system are proposed. Finally, the relation between regional and cooperative banks with public development banks is set under consideration and their differentiations and their common goals are highlighted. | Journal of Applied Finance Banking vol. 9 no. 4 2019 47-70 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2019 Parallel banking system Opportunities and Challenges Evanthia K. Zervoudi 1 Abstract The main aim of this article is to explicitly present what the parallel banking system is and its activities. The first part of the paper focuses on how this banking system could support real economy and contribute to the regional and the wider growth by operating supplementary to the systemic banking system. A special reference is done on the regulation frameworks that are applied on those banks in European Union and in United States. At this point it is underlined the importance of the appropriate implementation of the proportionality principle by regulators so as to avoid the excessive burden of small regional banks with unnecessary regulation costs. Challenges that local banks may face during their operation and factors that affect the health of regional and cooperative banks are pointed out as well. They are also presented significant sources of finance from which community banks may raise capital to fund their activities. Moreover possible strategies that local banks may follow in order to improve their efficiency and strengthen their role in the banking system are proposed. Finally the relation between regional and cooperative banks with public development banks is set under consideration and their differentiations and their common goals are highlighted. JEL classification numbers G20 G21 G23 G24 G28 G29 P51 Keywords parallel banking system regional banks community banks cooperative banks development banks regional growth proportionality principle one-size-fits-all rule dual-regulatory system allfinanz. 1 Athens University of Economics and Business Greece Article Info Received . January 25 2019. Revised February 19 2019 Published online May 10 2019 48 Evanthia K. Zervoudi 1 Introduction After an eight-year period of deep and prolonged recession .