Key linkages between banks and the non-bank financial sector

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

Financial Stability Review, 2023, vol. 1

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 Classification: G21, G22, G23

Keywords: Banks; non-bank financial intermediation; sectoral interlinkages (search for similar items in EconPapers)
Date: 2023-05
Note: 1486549
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