Recent Developments in Non-Bank Financial Intermediation and Initiatives to Enhance Its Resilience

Hiroshi Oishi, Eisuke Kobayashi and Yoshihiko Sugihara
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Hiroshi Oishi: Bank of Japan
Eisuke Kobayashi: Bank of Japan
Yoshihiko Sugihara: Bank of Japan

No 25-E-6, Bank of Japan Review Series from Bank of Japan

Abstract: Non-Bank Financial Intermediation (NBFI) accounts for about half of global financial assets and plays a pivotal role in financial intermediation activities. Recent observations have indicated a marked shift in the composition of NBFI, with a notable increase in the presence of investment funds, contrasting with the traditional composition of NBFI, which comprises insurance corporations and pension funds. The interconnectedness between banks and NBFI is also viewed to be increasing, mainly through increases in their cross-border transactions. Consequently, there has been a rise in cases where responses of NBFI, particularly investment funds, have been considered as contributing to the amplification of financial stresses, leading to heightened financial market volatility. In view of the potential for such stresses to propagate throughout the global financial system, including the banking sector, a series of policy recommendations have been issued by the Financial Stability Board (FSB) to contain vulnerabilities of NBFI. This article presents an overview of NBFI's financial intermediation, summarizes policy initiatives designed to enhance its resilience, and provides perspectives on issues surrounding NBFI through a review of the FSB's regular issue of the "Global Monitoring Report on Non-Bank Financial Intermediation" and its policy recommendations.

Keywords: non-bank financial institutions; financial intermediation; financial risk and risk management; government policy and regulation (search for similar items in EconPapers)
JEL-codes: G15 G23 G28 G32 (search for similar items in EconPapers)
Date: 2025-05-15
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