The popular term is 'shadow banking'. It is the expression used by bankers, regulators, politicians and the press to describe bank-like activities – especially lending – undertaken by non-banking organisations such as insurance companies, hedge funds, money market funds, securitisation vehicles, consumer finance companies and securities brokers.
But it is not a description that is popular with shadow bankers and their supporters. Dr Pete Hahn, a banking lecturer at Cass Business School in London, sums it up well. “The menacing name ‘shadow banking’ should be replaced with the less ominous but more explicit term ‘non-bank creditors’,” he says. Non-bank creditors that are not linked to the banking system “offer us a welcome reduced dependence on banks”, he stresses.