When an institution acts like a bank, it doesn’t mean that this institution is an actual bank; in fact, we can call this a Shadow Bank. Now specifically a Shadow Banking System is nothing but a network of non-financial institutions which are classified as non-depositary banks such as: investment banks, hedge funds, non-bank financial institutions and money market funds. This system is able to avoid standard banking regulations through the use of credit derivatives, which is considered one of the major problems during the crises around 2007-2008.
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