Banks more like non-banks and non-banks more like banks: rationale for the Volcker Rule It may sound a bit farfetched, but the global financial crisis of the last few years might have been brought about partly by banks becoming more like non-banks and non-banks becoming more like banks.
Some banks are now non-bank-like, as exemplified in the current financial jargon used to describe these banks’ business practices, such as “originate to distribute model” and “prop trading”, while some non-banks have become bank-like, as the phrase “shadow banking system” suggests. The financial innovations behind these changes are in essence welcome developments, helping to improve efficiency by shifting risk among economic agents.