Non-bank financial intermediation (NBFI) is the provision of credit, lending and similar financial services by institutions that are not banks, such as money market funds, investment funds, insurers, pension funds and finance companies. It is better known as shadow banking, the entry that covers how the sector works and why it can be fragile.
The Financial Stability Board, which coordinates financial regulation for the G20, adopted "non-bank financial intermediation" in place of "shadow banking" in 2018, partly because the older term sounded pejorative and partly because much of the activity is regulated, just not as banks are. The concern is the same: many of these firms perform maturity transformation, funding long-term or illiquid assets with money that investors can withdraw quickly, which makes them vulnerable to runs similar to a bank run but without deposit insurance or direct central bank support. Stresses in this sector played a central part in the 2008 financial crisis, and the market turmoil of March 2020 renewed efforts to regulate funds such as hedge funds and money market funds more closely.