Bringing the flashlight: Shadow banking in European Union countries

Compiling a unique shadow banking dataset for 24 European Union countries, I study the determinants of shadow banking for a pool of "Old" and "New" EU member countries. I document that the impact of various macro-financial shocks on shadow banking sector significantly differs between the two panels. The differences can be seemingly well explained by the different nature of the shadow banking in the two pools. I find evidence in support to the view that shadow banks act like substitutes to traditional banks in the "New", while they serve mostly as complements in the "Old" member countries.