What Are Shadow Banks?
Shadow Banks are basically such financial bodies that performs bank like activities but aren't really official/commercial Banks. As, unlike Commercial Banks they tend to avoid large & time consuming procedures for making transactions. Some examples Of Shadow Banks....: Investment Banks, Mutual Funds, Insurance Companies, etc.! Here's how it really works....
How Do Shadow Banks Works? How Are Shadow Banks Different From Commercial Banks? (Examples!)
Shadow Banks tends to collect money; for example like---- Mutual Funds, Insurance Companies, etc. ....& tends to Invest it somewhere instead of giving out loans as Commercial banks do....
& you know Commercial Banks actually have a leading role as they can usualy sell the property in case of a default. Don't they? Yes, they do!
But Shadow Banks &/OR Mutual Funds // Insurance Companies profit is completely dependent on those Financial Instruments they tend to Invest in!
So, they are basically risky! But Shadow Banks tends to take full responsibilty of that Risk!
Whereas, many Banks are also usually owned by the Government & so the Risks are usually covered!
From the profit earned by the Investments, Shadow Banks like---- Mutual Funds tends to give some profit to their customers as well! & we all know that Insurance Companies cover up the cost of just in case things like ---- for Car Damage (for Car Insurance) & Health Insurance (if by chance ill/poor health)!
Apart from all this Investing & stuff.... Shadow Banks also tends to do some Non-Banking activities...., that includes Hedge Funds & stuff.... you get the idea!
Articles You May Also Like To Read:
How Do Mutual Funds Works? Everything You Need To Know!
What Are Investment Banks? What Do They Do & How Do They Work?
Anyways, so that's all for today.... If you have anything to say.
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Thanks For Reading!
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