What is so special about European Shadow banking?
The 2007 financial crisis revealed the existence of a completely parallel funding system outside of regular banking, the so-called shadow banking system (SBS). Researchers have focused on the American SBS, but the European SBS has received little attention. Yet different features specific to continental Europe make it difficult to just copy and apply the analysis of the US SBS to a reality that is different on the old continent. In this paper we argue that the European SBS is not merely a by-product of the American SBS but rather has unique roots that have led to a distinct type of SBS. In particular, the European SBS occurs partly within the banks themselves. Indeed, the European SBS exists within the framework of a different variety of capitalism than that of the US. Finally the US and European SBS are strongly interconnected, playing a major role in the spread of the crisis.