Shadow banking: The primer

Shadow banks are organizations that lend money to people just like traditional banks do. The difference between traditional banks and shadow banks comes when you talk about who actually puts their money into these banks.

In a traditional bank, that money comes in from depositors. In a shadow banking system, that money comes from investors, not depositors, not people like you and I, but investors who want to invest in that company.

For more explanation on how shadow banking impacts the economy, listen to my interview on the subject from Marketplace July 14, 2010.

About the author

Paddy Hirsch is a Senior Editor at Marketplace and the creator and host of the Marketplace Whiteboard. Follow Paddy on Twitter @paddyhirsch and on facebook at www.facebook.com/paddyhirsch101
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Request you to please do a presentation for Dark Pools, MTF/ECN's and Clearing and Settlements. Thanks

Hello, i'm not from the states but i am an avid watcher of the whiteboard videos. Mr. Hirsch, could you do a whiteboard explanation of clearing and settlement? This is a topic which affects the entire financial system but is hardly elaborated on.

The videos are very helpful and easy understanding.Thanks a lot.

Thanks for the great videos, keep up the great work.

I however don't understand why the banks wouldn't be happy and jumping at the change to gain back market share from the shadow banking sector, by offering more competitive rates. Wouldn't the regulations imposed on the banks make them safer for consumers. If the banks were the consumers first choice in lending, as the rates COULD effectively be set low enough to make this possible, there wouldn't be a need for shadow banks at all. But I guess the question is how much profit is enough profit for the banks to want this extra business. Maybe dealing in mass volume would allow them to increase their profits by lowering rates below the level offered by other non banking lending institutions.

Please consider an Austrian School versus Keynesian theory video comparing the prominent attributes of each. You could consider County "A" versus County "B" and the central bank policy of each? Thanks.

Bill L

the videos are very helpful and easy understanding , i wish to know if you can put some videos regarding the various usage of chart and understanding of the chart indicators

Please add me to he list to receive the videos.


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