Consequently, as soon as the securities one party can ask need are acclimatized to fund their broker’s business, it really is similar to the fractional book banking and that can explain just why there are runs on shadow banking institutions.

Consequently, as soon as the securities one party can ask need are acclimatized to fund their broker’s business, it really is similar to the fractional book banking and that can explain just why there are runs on shadow banking institutions.

18 Such tasks of shadow banking institutions had been the origin of instability for dealer banking institutions in 2008, such as for example Bear Sterns, Merrill Lynch, and Lehman Brothers, leading to the outbreak of this crisis (Claessens et al., 2012, pp. 16–17). Hedge funds that pledged security to Lehman Brothers are not in a position to recover it whenever Lehman went bankrupt given that it had re-used it as the very own collateral (Fender and Gyntelberg, 2008, p. 7). 19

Probably the numerous re-using of security could be well comprehended by taking a look at organizations’ monetary statements: “Off-balance sheet item(s) like ‘pledged-collateral that is permitted to be re-used, ’ are shown in footnotes simultaneously by a number of entities, we.e., the pledged collateral is certainly not owned by these companies, but because of rehypothecation liberties, these businesses are lawfully permitted to utilize the security in their own personal name” (Singh, Aitken, 2010, p. 9). ادامه خواندن “Consequently, as soon as the securities one party can ask need are acclimatized to fund their broker’s business, it really is similar to the fractional book banking and that can explain just why there are runs on shadow banking institutions.”