a financial institution that performs a number of services similar to those offered by banks but that is not a licensed bank and is not subject to banking regulations - An industry that has been growing in size and importance relative to banking
- Loans from these entities, unlike transactions using bank accounts, are not liquid “nonmoney assets”
Nonbank Financial Institutions - Collective investment vehicle or pooled fund
- an investment vehicle that pools investments from many different sources, making investment decisions for them all as a group
- Index fund
- a type of pooled fund that tries to replicate a common stock or bond market index. As this fund does not require active management by a manager, fees are usually lower than in other types of pooled funds
- Hedge fund
- a type of pooled fund that often engages in highly speculative investments and to which access is generally restricted to wealthy clients
Nonbank Financial Institutions - Pension fund
- Insurance company
- a company that pays to cover all or part of the cost of specific risks against which individuals and companies chose to insure themselves
- Reinsurer
- a company that sells insurance to insurance companies to share the risk in case of large damages caused e.g. through natural disasters.
Nonbank Financial Institutions - Securities broker
- an agent responsible for finding a buyer for sellers of different securities, thereby offering enhanced liquidity to the seller
- Building society
- a financial institution which collects savings from its customers and offers them at preferential rates to other customers so that they can buy or build a residence
- Shadow bank
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