Product Overview

The case examines the rationale for why shadow banking exists, what role it plays in the financial system, and the risks that it may pose. In the case, an analyst in an investment fund is tasked to examine in greater detail the decision by GE to divest GE Capital. Understanding the rationale for this transaction, the role of GE Capital in the financial system, and the potential risks for the financial system would be important for the analyst's decision. This case would fit well in a second-year MBA elective course on Financial Institutions or Capital Markets.

Learning Objectives

To understand the nature of shadow banking and the reasons behind its existence; to discuss the potential risks that shadow banking may pose to the stability of the financial system; and to examine a specific corporate event, that of the divestiture of GE Capital by GE, and the rationale for GE; as well as use this example to discuss the broad landscape of shadow banking and financial regulation.