The final report of the Financial System Inquiry takes an idiosyncratic approach to considering the place of challenger businesses - on the one hand revving up the potential for crowd funding and on the other painting the non-bank sector as minimal.Measures to enhance resilience in the banking sector "could encourage some activities to move outside the prudential regulation perimeter," the final report of the inquiry observed.The inquiry made "no direct recommendations to address shadow banking," but said that, in Australia, the Council of Financial Regulators "should continue to monitor risks in the shadow banking sector to enable prompt responses to notable changes."Australia "currently has a small shadow banking sector, " the report said, taking a generous view.    David Murray, speaking at yesterday's media briefing, defended the narrow proposals on SME help."If the terms and conditions of lending to small and medium enterprises by the existing banking system are too onerous, others will step up into that market," he said. "That's what these recommendations are about. The information, the crowd funding, peer-to-peer lending all have that effect. "The truth of the matter here is that small businesses are riskier than some other businesses."Murray said "the effect on risk weights will put more competition to the extent that residential mortgages are used to fund small business and we've also looked closely at loan contracts for small business which have these quite unreasonable non-monetary default clauses and recommended a new regime to deal with that."