Mapping exposures of EU banks to the global shadow banking system

Jorge Abad, D’Errico, Marco, Neill Killeen, Vera Luz, Tuomas Peltonen, Richard Portes and Teresa Urbano

Journal of Banking & Finance, 2022, vol. 134, issue C

Abstract: This paper provides a unique snapshot of the asset exposures of EU banks to shadow banking entities within the global financial system. Drawing on a rich and novel dataset, we show that 60% of the EU banks’ exposures are towards non-EU entities, particularly US-domiciled shadow banking entities. We assess the degree of concentration across different types of shadow banking counterparties. We show that while banks’ exposures are diversified at the individual level, this diversification leads to high overlap across different types of shadow banking entities, with consequent systemic risk. We also examine how bank- and country-level characteristics relate to the exposures of EU banks to shadow banking entities. Our results emphasise the importance of monitoring these cross-border and cross-sector exposures and closing remaining data gaps.

Keywords: Bank complexity; Shadow banking; Interconnectedness; Financial stability; Macroprudential policy (search for similar items in EconPapers)
JEL-codes: F65 G21 G23 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:134:y:2022:i:c:s0378426621001278

DOI: 10.1016/j.jbankfin.2021.106168

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