A Review Paper on Shadow Banking in India

Abstract

The field of 'shadow banking' has garnered a lot of interest from the research community since the financial crisis of 2007-08. On the other hand, their Indian counterpartsnon-bank financial companies (NBFCs), still have a very shallow pool of knowledge. This paper intends to systematically review the existing literature on Indian NBFCs, categorize it thematically and summarize to find research gaps. The present study considers Scopus as its data house to undertake a 'systematic literature review' (SLR) of the NBFC sector in India. By synthesizing various exclusion criteria, relevant studies in the area are identified. Following this, 'conceptual/thematic content analysis' is done to identify popular themes. 25 relevant articles subject to the exclusion criteria are identified from the data house. Three dominant themes emerge. These are 'Performance of NBFCs', 'Risks and Challenges of NBFCs' and 'Evolution and Future of NBFCs'. Microfinance Institutions (NBFC-MFIs) were found to be the mostresearched type of NBFC. Some of the gaps in research, as diagnosed by this review, are studies comparing banks and NBFCs, studies comparing different shadow banking systems in the world, studies analyzing NBFCs in the wake of COVID-19 and studies focusing on NBFCs other than MFIs (there are more than 10 different types of NBFCs). The paper is the first of its kindsystematically collating the literature on Indian shadow banking. This research work holds importance for future researchers looking for potential topics in the area of non-bank financial intermediation that are still waiting to be explored.