particular focus on the “shadow banking” system has emerged since the 2008 global financial crisis as some scholars believed that the vulnerability of the system had largely worsened the crisis. As a new financial term, “shadow banking” can simply be understood as non-bank financial intermediaries that perform traditional banking functions. Nevertheless, the shadow banking system has not yet gained a globally recognized definition. The differences between the various definitions are mainly concerned with which components should be included in the system. For example, some believe that the shadow banking system should not include traditional banking entities which taking public deposits, while some believe it should. Exploring the definitions of the shadow banking system among existing scholars is the first step for understanding what the system really is.
Despite the Canadian financial system’s sound regulatory framework, the systemic risks exposed by the shadow banking system still need to be explored. There is currently a deficiency of studies in this particular field. For a detailed and continuous evaluation, it is necessary to know if there are any risks in the system so more effective regulating policies can be provided.