By Definition, "Shadow Banks Are a Diverse Set of Financial

question 16

Essay

By definition, "shadow banks are a diverse set of financial institutions that perform some functions similar to banks, but do so outside the regulatory system that applies to traditional banking." In the recession of 2008, the government financially rescued many shadow banks. Was this a moral hazard? If yes, then why did the government do this?

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Definitions:

Sales Discount

A reduction in the price of goods or services offered to customers, typically to prompt early payment or bulk purchases.

Contra Revenue Account

An account used to record reductions in gross revenue, such as discounts, returns, and allowances.

Operating Expense

Refers to the costs associated with the day-to-day functions of a business, excluding costs related to production.