Which of the following has/have impacted the growth of shadow banks? A. Faulty audits of these institutions by the Financial Stability Board. B. The state of traditional banks post the financial crisis. C. Need for credit which traditional banks are unable to meet.

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1. Option $B$ (the state of traditional banks post the financial crisis): The passage states that shadow banks “have flourished in part because the traditional ones, battered by losses incurred during the financial slump, are under pressure.” It also cites tighter capital requirements and fear of penalties keeping traditional banks “grounded,” directly linking post-crisis weakness of banks to the growth of shadow banking.

2. Option $C$ (need for credit which traditional banks are unable to meet): The passage explains that in places like China, where banks are discouraged from lending to certain industries and offer low deposit rates, “non-banks fill the gap.” It also says non-bank financing “offers an additional source of credit” where formal banking is expensive or absent. This shows unmet credit demand encouraged shadow-bank expansion.

3. Conclusion: Both statements $B$ and $C$ are explicitly supported by the passage, so the correct choice is “Only B and C.”

FINAL_ANSWER: b

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