As a result of the financial crisis of 2007-2009, the size of the shadow banking system

A. became smaller than the commercial banking system.

B. became larger than the commercial banking system.

C. declined, but remained larger than the commercial banking system.

D. increased, but remained smaller than the commercial banking system.

Question

Graham Bentley

Business

13 December, 15:39

As a result of the financial crisis of 2007-2009, the size of the shadow banking system

A. became smaller than the commercial banking system.

B. became larger than the commercial banking system.

C. declined, but remained larger than the commercial banking system.

D. increased, but remained smaller than the commercial banking system.

+4

Answers (1)

Know the Answer?

Lorenzo Ochoa · Answer 1

C

Explanation:

The shadow banking system are non bank financial institution such as investment bank and hedges funds.

The 2007-2009 financial crisis occurred as a result of breakdown of trust and deregulation in the banking system. It affected the commercial banks more as they were forced to rely on mortgages for the profitable sales of derivatives.

Even though the size of the shadow banks declined, yet they remained larger than the commercial banking system after the crisis.