LeoGlossary: Shadow Banking

These are financial intermediaries who create credit across the global financial system. The difference is, unlike the banks, these are not subject to regulatory oversight.

Shadow banks are also known as nonbank financial companies (NBFC).

Unregulated activities by regulated financial institutions also falls under the umbrella of shadow banking.

Examples are:

• hedge funds
• unlisted derivatives
• other unlisted assets
• credit default swaps

Shadow banking does not accept traditional deposits like regulated banks.

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