ABSTRACT
The debates about the scope and constitution of shadow banking are set to continue for some time. They illustrate, among other things, that any definition of shadow banking is an outcome of a particular set of ideational values and often carries an observer's bias. Broadly, shadow banking can be understood as a system of credit creation and intermediation outside the traditional banking sector. Within this broad definition, however, shadow banking is geographically and politically diverse, as is its relationship to the traditional sectors of the economy, including banking. An activities-based view of shadow banking also gives different insights into the regulatory framework. First, although a better recognition of risks stemming from the shadow banking system is seen as paramount to financial stability, it is not clear how insights into such risks are best gained. Most commonly, the emergence and growth of shadow banking is attributed to the regulatory and policy context.
