Shadow banking refers to financial firms and activities that perform similar functions to those of depository banks. Although the term is used to describe dissimilar firms and activities, a general policy concern is that a component of shadow banking could be a source of financial instability, even though that component might not be subject to regulations designed to prevent a crisis, or be eligible for emergency facilities designed to mitigate financial turmoil once it has begun. This book develops a general framework for analysing financial intermediation, and applies these concepts to several specific shadow banking sectors. The book focuses on comparing and contrasting the fundamental economic problems of simple banking and associated policy responses to analogous problems and policy proposals in shadow banking.