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The shadow banking system refers to the non-bank financial intermediaries that provide financial services similar to traditional banks but operate outside the regular banking regulations. These institutions facilitate credit creation, liquidity, and maturity transformation, often with a higher level of risk than their traditional banking counterparts.

Now that we understand what the shadow banking system is, let's investigate each option to determine which one accurately represents the main players in the shadow banking system. a) Large commercial banks - These institutions typically operate under a traditional banking structure and are heavily regulated. They are not considered part of the shadow banking system. b) Smaller banks - Similar to large commercial banks, smaller banks also operate under a conventional banking structure and are subject to regulations. They are not part of the shadow banking system. c) Investment banks, hedge funds, and brokerage houses - Investment banks, hedge funds, and brokerage houses are examples of non-bank financial institutions operating outside the regular banking regulations. They can facilitate credit creation, liquidity, and maturity transformation without being as heavily regulated as traditional banks. These institutions are part of the shadow banking system. d) Foreign investors - While foreign investors may interact with the shadow banking system, they are not part of the system itself as they do not provide similar services like banks.

After examining the options, we can conclude that the main players in the shadow banking system are: c) Investment banks, hedge funds, and brokerage houses.