The effect of shadow banking on inflation in selected countries

Document Type : Scientific paper

Authors

1 PHD Student in Mazandaran University

2 professor of Economics University of Mazandaran

3 university of Mazandaran

4 Faculty member of Economics at University of Mazandarn

Abstract

The present study examines the impact of shadow banking on inflation rates in four groups of selected countries (including developed countries with high levels of shadow banking, developed countries with low levels of shadow banking, developing countries with high levels of shadow banking, and developing countries with low levels of shadow banking) during the period 2002-2020. The research modeling is based on dynamic panel patterns, and the relationships between variables are estimated using the Generalized Method of Moments (GMM) technique. The results of the model estimation in two groups of countries under study, namely developed countries with high levels of shadow banking and developing countries with low levels of shadow banking, indicate that the expansion of shadow banking leads to increased inflation, with this effect being exacerbated through the production channel. Conversely, the findings suggest a negative impact of shadow banking on inflation in developed countries with low levels of shadow banking and developing countries with high levels of shadow banking. It is worth noting that the results of the model estimations show that in none of the four groups of countries examined, shadow banking has led to inflation through the money creation channel. It is worth noting that the results of the model estimations show that in none of the four groups of countries examined, shadow banking has led to inflation through the money creation channel.

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History

  • Receive Date: 22 February 2024
  • Revise Date: 07 July 2024
  • Accept Date: 10 July 2024

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