Shadow Banking
Credit intermediation activities by non-bank entities outside typical regulations.
Detailed Description
Shadow Banking
What is shadow banking?
Shadow banking refers to financial intermediaries operating outside traditional banking, providing similar services without regulatory oversight.
What are some types of shadow banking entities?
Types include investment funds, money market funds, special purpose vehicles, peer-to-peer lending platforms, and finance companies.
What risks are associated with shadow banking?
Risks include lack of regulation, liquidity risk, credit risk, and systemic risk.
How does shadow banking impact financial stability?
It can enhance credit and liquidity but may also lead to instability due to risks and lack of transparency.
What are the differences between shadow banking and traditional banking?
Traditional banks are heavily regulated with capital requirements and deposit insurance, while shadow banks operate with fewer constraints.