LIMEAN and Shadow banking: Difference between pages

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Formerly and informally a guess at the average of LIBOR and LIBID. Use of this term is deprecated.
The system of credit creation and intermediation that involves entities and activities fully or partially outside the conventional banking system.


For the reasons discussed in the article on LIBID, there is no observed rate and LIMEAN is often taken as 1/16th % less than LIBOR.


In an analogy with London Inter-Bank Offered Rate, LIMEAN is sometimes expanded as London Inter-bank Mean rate.
Some non-bank entities and transactions have the capacity to operate on a large scale in ways that create bank-like risks to financial stability (for example, longer-term credit extension based on short-term funding and leverage).
 
Such risk creation may take place at an entity level but it can also form part of a complex chain of transactions, in which leverage and maturity transformation occur in stages, and in ways that create multiple forms of feedback into the regulated banking system.
 
For this reason regulators are taking increasing interest in the activities of the shadow banking system.




== See also ==
== See also ==
* [[LIBID]]
* [[Shadow bank]]
* [[LIBOR]]
* [[Bank for International Settlements]]
* [[London inter-bank mean rate ]]
* [[Financial Stability Board]]
* [[Mean]]
* [[Bank]]
* [[Intermediation]]
* [[Credit]]
* [[Maturity transformation]]
* [[Non-bank financial intermediaries]]
* [[Putting a limit on losses]]


[[Category:Manage_risks]]
[[Category:Long_term_funding]]
[[Category:Compliance_and_audit]]
[[Category:Risk_frameworks]]

Revision as of 15:25, 31 October 2016

The system of credit creation and intermediation that involves entities and activities fully or partially outside the conventional banking system.


Some non-bank entities and transactions have the capacity to operate on a large scale in ways that create bank-like risks to financial stability (for example, longer-term credit extension based on short-term funding and leverage).

Such risk creation may take place at an entity level but it can also form part of a complex chain of transactions, in which leverage and maturity transformation occur in stages, and in ways that create multiple forms of feedback into the regulated banking system.

For this reason regulators are taking increasing interest in the activities of the shadow banking system.


See also