The total amount of credit provided by non-banks already exceeds $100 trillion and poses some overlooked systemic risks. This has real consequences for long-term investors.
Within a decade, the «shadow banking system», which refers to credit activities provided by non-bank financial intermediaries, has become the norm in the financial world. Non-banks have largely taken over lending activities from banks. Today, players such as investment funds (fixed income funds), private equity firms and structured finance vehicles play the role of banks by extending loans directly to companies, except with much less regulatory oversight than banks.