Benedikt Kagerer

30 May 2023

FINANCIAL STABILITY REVIEW - ARTICLE

Key linkages between banks and the non-bank financial sector

• Emanuele Franceschi
• Maciej Grodzicki
• Benedikt Kagerer
• Christoph Kaufmann
• Francesca Lenoci
• Luca Mingarelli
• Cosimo Pancaro
• Richard Senner

Financial Stability Review Issue 1, 2023

English

Details

Abstract

Banks are connected to non-bank financial intermediation (NBFI) sector entities via loans, securities and derivatives exposures, as well as funding dependencies. Linkages with the NBFI sector expose banks to liquidity, market and credit risks. Funding from NBFI entities would appear to be the most likely and strongest spillover channel, considering that NBFI entities maintain their liquidity buffers primarily as deposits and very short-term repo transactions with banks. At the same time, direct credit exposures are smaller and are often related to NBFI entities associated with banking groups. Links with NBFI entities are highly concentrated in a small group of systemically important banks, whose sizeable capital and liquidity buffers are essential to mitigate spillover risks.

JEL Code

G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G22 : Financial Economics→Financial Institutions and Services→Insurance, Insurance Companies, Actuarial Studies
G23 : Financial Economics→Financial Institutions and Services→Non-bank Financial Institutions, Financial Instruments, Institutional Investors