Paul Schempp How Does Shadow Banking Influence Financial Stability?

Paul Schempp is Senior Research Fellow at the Max Planck Institute for Research on Collective Goods in Bonn (Germany). He holds a PhD from Bonn Graduate School of Economics. In his research he concentrates on financial economics and applied microeconomics. For his work on liquidity provision by banks, shadow banks and the government, and the implications for financial stability Schempp was awarded the Otto Hahn Medal of the Max Planck society.

Area of Research

Financial Economics, Banking, Applied Microeconomic Theory

Stephan Luck and Paul Schempp. "Outside Liquidity, Rollover Risk, and Government Bonds." MPI Collective Goods Preprint (in press) (2014).  
Stephan Luck and Paul Schempp. "Sovereign Defaults, Bank Runs, and Contagion." MPI Collective Goods Preprint (in press) (2014).  
Stephan Luck and Paul Schempp. "Banks, Shadow Banking, and Fragility." ECB Working Paper No. 1726 (2014).  
Stephan Luck and Paul Schempp. "Regulatory Arbitrage and Systemic Liquidity Risk." Unpublished (2015).  

since 2015

Senior Research Fellow

Max Planck Society (more details)

Max Planck Institute for Research on Collective Goods

2012-2014

Research Fellow

Max Planck Society (more details)

Max Planck Institute for Research on Collective Goods

2008-2009

Visiting PhD Student

University of California, Berkeley

PhD Program in Economics

2015

PhD in Economics

University of Bonn (Rheinische Friedrich-Wilhelms-Universität Bonn)

Bonn Graduate School of Economics

2009

Diploma in Economics

University of Bonn (Rheinische Friedrich-Wilhelms-Universität Bonn)

Prizes

Otto Hahn Medal (2016)

Best Poster Award at the 1st ECB Forum on Central Banking in Sintra, Portugal for the Project “Banks, Shadow Banking, and Fragility” (joint work with Stephan Luck) (2014)

Fellowships

Scholarship of the “Max Planck Gesellschaft” (2013-2014)

Scholarship of the “Deutsche Forschungsgemeinschaft” (German Research Foundation) (2009-2012)

German Academic Exchange Service (DAAD) (2008-2009)

© Maximilian Dörrbecker

Max Planck Society


"The Max Planck Society is Germany's most successful research organization. Since its establishment in 1948, no fewer than 18 Nobel laureates have emerged from the ranks of its scientists, putting it on a par with the best and most prestigious research institutions worldwide. The more than 15,000 publications each year in internationally renowned scientific journals are proof of the outstanding research work conducted at Max Planck Institutes – and many of those articles are among the most-cited publications in the relevant field." (Source)

Institute

Max Planck Institute for Research on Collective Goods

"Many goods are not obviously best provided by unregulated markets. This does not necessarily imply that government does a better job. But research can do society a service in defining why markets have a hard time with some goods, and in comparing institutional arrangements aiming at their provision. In a precise way, the problem is defined by the concept of public goods. Capitalising on the theory of mechanism design, it can be further improved. Using experimental methods, it can be put into perspective. Yet some social dilemmas are better analysed in alternative categories. It may even be preferable to start analytically from the political decision to intervene into markets. The institute tackles these questions from the combined perspectives of economics, law and psychology. While the institute started with applications from environmental problems, current work focuses on antitrust, regulation and financial stability." (Source)

Map

In the banking model of maturity transformation presented in this video, the features of the shadow banking sector and its influences on financial stability are analyzed. As PAUL SCHEMPP explains, the model shows that banks and shadow banks can co-exist without harm to the financial sector as long as the shadow banking sector is small. However, liquidity guarantees from banks to shadow banks and a growing shadow banking sector increase the risk of bank runs.

LT Video Publication DOI: http://dx.doi.org/10.21036/LTPUB10003

Banks, Shadow Banking, and Fragility

  • Stephan Luck and Paul Schempp
  • ECB Working Paper
  • Published in 2014

Chicago

Stephan Luck and Paul Schempp. "Banks, Shadow Banking, and Fragility." ECB Working Paper No. 1726 (2014).

Banks, Shadow Banking, and Fragility

  • Stephan Luck; Paul Schempp
  • Unpublished

Chicago

Stephan Luck and Paul Schempp. "Banks, Shadow Banking, and Fragility." Unpublished