Transaction Cost and Asymmetric Information & Shadow Banking

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Part I

Interaction Between Financial Intermediation Efficiency and Economic Growth, Efficient Portfolios in Financial Markets with Proportional Transaction Costs and A Model of Financial Structure and Financial Fragility articles.

Explain how financial markets and financial intermediaries manage the information costs that arise from asymmetric information.

Part II

The Shadow Banking System and Hyman Minsky’s Economic Journey (Links to an external site.) and Shadow Banking: Global Trends and Policy Developments (Links to an external site.) articles.

Determine why shadow banking has served a critical role in the market-based financial system. Compare and contrast the traditional banking system and the shadow banking system.

 

 

Sample Solution

Transaction Cost and Asymmetric Information & Shadow Banking

A shadow banking system is the group of financial intermediaries facilitating the creation of credit across the global financial system but whose members are not subject to regulatory oversight. It also refers to unregulated activities by regulated institutions. The shadow banking system was an important part of the 2007-2009 financial crisis. A decrease of funding from the shadow banking system caused a restriction of lending and a decline in economic activity. Then as loan losses increase, banks` balance sheets deteriorate, which reduces their lending activity. A traditional bank would generally take in deposits to lend loans to the ones seeking, but shadow banks don’t; they have different ways to build their loan funds.

Semiology is the discipline, concerned with meaning-making, the study of sign processes and sensible communication. This also involves the study of signs and the processes, indication, designation, analogy, metaphor, symbolism, signification and communication. Semiology as a Science is connected to the word Semiosis which is a common word used in semiotics to delegate the yielding and interpretation of a sign. Semiology can further be defined, as the branch of knowledge (academic) that is taught and researched at the University level. In the social sciences, it could be regarded as the field of study concerned with society and human behaviour.
Semiology is tightly connected to the discipline of Linguistics, which, analyses the structure and meaning of language more pointly. The semiotic tradition research into the study of signs and symbols as a significant aspect of communications.
Researchers in the field of Semiotics have not only contributed in giving an adequate definition of Semiology, however, they have also come up with different fields of study in Semiotics. This are explained below;
Bio-semiotics: This studies the production and interpretation of signs and codes in the biologic realm. This field attempts to desegregate the findings of scientific biology and semiotics, representing a paradigmatic shift in the western scientific view of life, demonstrating that semiotics is its immanent and intrinsic feature
Cognitive semiotics: This refers to the study of meaning-making by adopting and integrating methods and theories developed in the cognitive sciences as well as in the human sciences. This also includes the conceptual and textual analysis as well as experimental and ethnographic examinations.
Computational Semiotics: This field tries to organise the process of semiosis, in the observation of and design for Human-Computer Interaction (HCI), and mimic area of huma

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