The troubling rise of shadow banking | Number Theory

What was once seen as a peripheral feature of the financial system has now become central to how modern capitalism allocates risk and capital

Over the past decade, global finance has moved outside traditional banks. This shift is often described as the rise of shadow banking, a loose term for credit and financial activity carried out by non-bank entities that perform bank-like functions but sit outside the core regulatory perimeter. What was once seen as a peripheral feature of the financial system has now become central to how modern capitalism allocates risk and capital. This expansion is unfolding at a time of buoyant markets, lighter oversight and incentive structures that prioritise short-term gains, raising uncomfortable questions about whether the financial system is once again building vulnerabilities in plain sight.

Representative photo

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