shadow bank

Noun

shadow bank (plural shadow banks)

1. (derogatory) An entity that illegally performs banking functions.
   • Regulators have said there was an entire shadow bank within the official BCCI with separate books.1991 July 23, “A Slam Heard 'Round the World; Closing of BCCI's Doors Leaves...”, in Washington Post
2. An entity not subject to banking regulation that performs banking functions.
   • The rise of unregulated “shadow banks” and the lack of restrictions on insurers and asset managers were pinpointed as concerns – as was the growth of global banks to a scale larger than 2008 and the fear that they are again “too big to fail”.2018 October 7, Shane Hickey, “Shadow banks, trade wars, Trump … clouds gather over the IMF’s paradise”, in The Observer
   • The results of the experiment show that the broad policy regime performs best, with the narrow Basel III regime actually working more procyclical than the standard regime when hit with a hypothetical shock. This is because of credit is forced through the shadow-bank channel when the standard bank...2020, Jon Nævdal Johansson, Macroprudential Policy Reviewed: An Economic Assessment of Implemented Macroprudential Policy Regimes Post the Great Recession, Department of Economics, University of...