Non­bank finan­cial firms play important roles in pro­vi­ding finan­cial ser­vices to U.S. con­su­mers and busi­nes­ses by pro­vi­ding credit to the eco­no­my across a wide ran­ge of retail and com­mer­cial asset clas­ses. Non­banks are well inte­gra­ted into the U.S. pay­ments sys­tem and play key roles such as faci­li­ta­ting back-end check pro­ces­sing; enab­ling card issu­an­ce, pro­ces­sing, and net­work acti­vi­ties; and pro­vi­ding cus­to­mer-facing digi­tal pay­ments soft­ware. Non­bank finan­cial firms also play important roles in capi­tal mar­kets and in pro­vi­ding nan­cial advice and exe­cu­ti­on ser­vices to retail inves­tors, among a ran­ge of other services.

The finan­cial cri­sis alte­red the envi­ron­ment in which banks and non­banks com­pe­te to pro­vi­de finan­cial ser­vices. Spe­ci­fi­cal­ly, many tra­di­tio­nal finan­cial com­pa­nies such as banks, credit uni­ons, and insuran­ce com­pa­nies expe­ri­en­ced signi­fi­cant dis­tress during the cri­sis. This dis­tress cau­sed the insol­ven­cy or rest­ruc­tu­ring of many exis­ting finan­cial com­pa­nies, par­ti­cu­lar­ly tho­se with vola­ti­le fun­ding sources and con­cen­tra­ted balan­ce she­ets. The government respon­ded to this dis­tress, and the unpre­ce­den­ted magnitu­de of tax­payer sup­port it trig­ge­red, by wri­ting far – reaching laws that man­da­ted the adop­ti­on of hund­reds of new regu­la­ti­ons. In some cases, the­se poli­cy chan­ges made cer­tain pro­duct seg­ments unpro­fi­ta­ble  for banks, ther­eby dri­ving acti­vi­ty out­side of the ban­king sec­tor and crea­ting oppor­tu­nities for emer­ging non­bank finan­cial firms to address unmet mar­ket demands. .…

Quel­le /​ Link: A Finan­cial Sys­tem That Crea­tes Eco­no­mic Oppor­tu­nities: Non­bank Finan­cials, Fin­tech, and Innovation

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