The aim of this Master thesis is to identify risks associated with shadow banking and to verify whether they are fully regulated in EU law. The recognized shadow banking systemic risks are runs on financial institutions and/or illiquidity, interconnectedness with the regulated part of the financial system, excessive leverage, procyclicality and opacity. The European Commission`s legislative proposals and adopted legislative acts unveil that in EU law a regulatory approach with ex ante restrictions is embraced. The relevant regulation concerning credit institutions, investment firms, insurance and reinsurance companies, investment funds and other financial institutions is presented from the systemic risk view point. The thesis suggests that despite of certain open questions it may be hard to argue that shadow banking is a phenomenon not adequately regulated in respect of encompassed entities and performed activities.
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