Case Study Questions And Answers

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  1. Explain the unique aspects of the shadow banking business model. What type of institutions comprise this industry? What is the funding profile of these types of institutions?
  2. Why does shadow banking exist? What gaps does it fill in the economy?
  3. What are the advantages of the shadow banking industry? What are the risks? How can they be mitigated?
  4. Should the shadow banking industry be more comprehensively regulated?
  5. GE Capital:
    • a. In your view, is GE Capital a shadow bank? Should the market care about such a characterization?
    • b. What does GE Capital’s historical ROE suggest about the profit potential for nonbank financial institutions vis-a-vis traditional commercial banks?
    • c. Why did GE initiate the GE Capital Exit Plan? Was it successful?
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