Share the article
twitter-iconcopy-link-iconprint-icon
share-icon
Country reportsJanuary 2 2013

Regulation drives alternative lenders out of the shadows

Non-bank organisations are increasingly engaged in bank-like activities, filling the gaps that banks are leaving and finding entirely new opportunities, which has led authorities to take note and tighten up the regulatory and supervisory framework for the shadow banking system. 
Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

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.

To continue reading, join our community and benefit from

  • In-depth coverage across key markets
  • Comments from financial leaders and policymakers worldwide
  • Regional/country bank rankings and awards
Activate your free trial