Shadow banking is a broad concept. A possible definition is that it comprises non-bank institutions which undertake bank-like activities. Another characteristic is that the sector is overall less regulated.

Since the turn of the millennium, investment funds have become a significant financial intermediary in Finland. From the financial stability perspective, the risks surrounding them are similar to those that are usually related to banking.

This appendix describes the method applied, the results of which are reported in the article ‘Investment funds have grown significantly in Finland – do their operations involve stability risks?’