shadow banking system


System of non-financial institutions that borrow money in the short term and take that money to invest in long-term assets. Shadow banking systems are able to avoid standard banking regulations through the use of credit derivatives. These are also said to be one of the major problems which contributed to the subprime mortgage crisis around 2007-2008.

Use this term in a sentence

You may want to try and use a shadow banking system if you think it will make things easier for you.

​ Was this Helpful? YES  NO 4 people found this helpful.

Consumers discovered far too late how wary they should have been of the shadow banking system that was developing in their community.

​ Was this Helpful? YES  NO 11 people found this helpful.

Part of the reason of the mortgage crisis in 2007 was due to the shadow banking system. Banks would borrow short term funds and then invest them in mortgages.

​ Was this Helpful? YES  NO 3 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
SGD shadow calendar