Chapter EMA, Problem 1MCQ

To determine

To state: The option that is true for shadow banking.

Answer to Problem 1MCQ

The correct option is D i.e. accept deposits.

Explanation of Solution

Shadow banking term is used to describe bank-like activities (which are majorly lending) that proceed outside the traditional banking sector. It is also referred to as market-based finance or non-bank financial intermediation in the international market.

Shadow bank lending has the same function as to that traditional bank lending. Usually, such institutions are not permitted to take demand deposits from the public that was done traditionally and easily available funds, such as the funds that are kept in savings or checking accounts. This restraint keeps them out of the range of conventional oversight from state and federal financial regulators.

Economics Concept Introduction

Introduction:

Shadow banking: This term is used to describe bank-like activities (which are majorly lending) that proceed outside the traditional banking sector. It is also referred to as market-based finance or non-bank financial intermediation in the international market.

Shadow bank lending has the same function as to that traditional bank lending.