Access or Competition? Non-Bank Lending to Irish Non-Financial Corporates

Barra McCarthy and Carlos Navarro Ramírez
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Barra McCarthy: Central Bank of Ireland
Carlos Navarro Ramírez: Central Bank of Ireland

No 1/SI/25, Central Bank Staff Insights from Central Bank of Ireland

Abstract: Overall, the difference between non-bank and bank interest rates is not economically meaningful for most loans, with non-bank interest rates, on average, 58 basis points higher than banks, controlling for loan and borrower characteristics. Non-banks provide loans somewhat faster than banks, which borrowers may be willing to pay additional interest for. However, loans associated with real estate, a sector which accounts for 50% of non-bank lending in recent years, have a higher premium, implying these lenders are enabling access to a different segment of the credit market. While this lending can entail macro-financial benefits, by supporting property development and diversifying risk across the financial system, it also means that non-bank real estate lending may be highly sensitive to market conditions.

Date: 2025-06
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