Shadow banking refers to financial intermediaries that provide bank-like services but operate outside of traditional banking regulations. While these institutions may look different from traditional banks, they serve similar purposes such as providing credit and liquidity to the economy. However, they often pose significantly more risk due to their lack of regulatory oversight.

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Shadow Banking

Question 254

Multiple Choice

Shadow banking:

A) doesn't look like traditional banking but serves similar purposes while posing significantly more risk.
B) is another name for traditional banking.
C) looks like traditional banking but serves different purposes and imposes significantly more risk.
D) doesn't look like traditional banking but serves similar purposes while not posing any additional risk.

Correct Answer: