In fact, an entire shadow banking sector developed, comprising a chain of non-bank institutions which were able to provide similar financial intermediary services as traditional banks. In this environment, deregulation was partly a response to this and allowed banks to cope with the increasing pressure from non-bank competitors.
In the US, the gradual unwinding and the ultimate repeal of the Glass-Steagall Act in the late 1990s made it possible to reunite investment banking and commercial banking which had been separated since the crisis of the 1930s.2 In Europe, the universal banking model already had a longer history of combining commercial banking and investment banking under the same roof.