Alternative financial entities emerging from the shadows

 In the wake of the financial crisis and amid an increased regulatory environment, traditional banks have seen their influence wane as the so-called shadow banking industry has gained steam. Hedge and money market funds have witnessed a renewed interest as many of the larger, well-established financial institutions have grown more cautious about lending, says the Financial Times.

“Regulatory proposals, such as the Dodd-Frank Act and Basel III that are pushing riskier activities outside the banking system . . . will likely increase the shadow banking world,” economists Zoltan Pozsar and Manmohan Singh wrote in a recent paper.”