Introduction

This introduction presents an overview of the key concepts discussed in the subsequent chapters of the book. This book summarises the major approaches to the study of shadow banking developed over the past few years in different academic fields, including political science, law and socio-legal studies of finance, economics and business. One of the major consequences of the financial system's ability to escape or augment existing regulations is the problem of systemic risk. Major bank failures during 2007-09 occurred at a nexus of traditional and shadow banking systems. Benign approaches to financial innovation understand it as a complex set of techniques, institutions and processes that include, but are not confined to, the invention of new financial products and securities; the creation or augmentation of a market by new financial instruments; the emergence of new types of financial institutions; and structural shifts within financial institutions themselves.