@workingpaper {570541,
	title = {Shadow Banking and the Four Pillars of Traditional Financial Intermediation},
	year = {2020},
	note = {Revise and resubmit, Review of Economic Studies.},
	abstract = {Traditional banking is built on four pillars: SME lending, insured deposittaking, access to lender of last resort, andprudential supervision. This paper unveils the logic of the quadrilogy by showing that it emerges naturally as an equilibrium outcome in a game between banks and the government. A key insight is that regulation and public insurance services (LOLR, deposit insurance) are complementary.\&nbsp;The model also shows how prudential regulation must adjust to the emergence of shadow banking, and rationalizesstructural remedies to counter financial contagion:ring-fencing between regulated and shadow banking and the sharingof liquidity in centralized platforms.},
	author = {Emmanuel Farhi and Jean Tirole}
}
