Bank and non-bank financial institutions’ crossborder linkages: New evidence from international banking data

Lorenz Emter, Neill Killeen and Peter McQuade

No 3/FS/21, Financial Stability Notes from Central Bank of Ireland

Abstract: This Note examines the factors associated with global banks’ cross-border claims on non-bank financial institutions. In line with the substantial growth of non-bank financial intermediation internationally, banks’ cross-border claims on non-bank financial institutions have grown rapidly in recent years. As a global hub for non-bank financial intermediation, Ireland hosts a large share of the non-bank financial institutions captured within these international banking data. Our results suggest that tightening (loosening) monetary policy can decrease (increase) cross-border bank claims on non-bank financial institutions at a global level. Moreover, we find that the tightening of borrower-based macroprudential policies is associated with an increase in cross-border bank flows to non-bank financial institutions. Our findings illustrate the potential for cross-border spillovers from changes to monetary and macroprudential policies and the importance of closely monitoring cross-border linkages between banks and non-bank financial institutions. Our findings also highlight the need for developing and operationalising the macroprudential policy framework for non-bank financial intermediation given the potential for spillover effects across the financial system.

Date: 2021-06
New Economics Papers: this item is included in nep-ban, nep-cba, nep-isf, nep-mac and nep-mon
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