The Growing Risk of Spillovers and Spillbacks in the Bank‑NBFI Nexus

Viral V. Acharya, Nicola Cetorelli and Bruce Tuckman ()
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Bruce Tuckman: https://www.stern.nyu.edu/faculty/bio/bruce-tuckman

No 20240620, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Nonbank financial institutions (NBFIs) are growing, but banks support that growth via funding and liquidity insurance. The transformation of activities and risks from banks to a bank-NBFI nexus may have benefits in normal states of the world, as it may result in overall growth in (especially, credit) markets and widen access to a wide range of financial services, but the system may be disproportionately exposed to financial and economic instability when aggregate tail risk materializes. In this post, we consider the systemic implications of the observed build-up of bank-NBFI connections associated with the growth of NBFIs.

Keywords: nonbank financial institutions (NBFIs); non-bank financial intermediaries; nonbanks; systemic risk; spillovers; bank regulation (search for similar items in EconPapers)
JEL-codes: G01 G21 G23 G28 (search for similar items in EconPapers)
Date: 2024-06-20
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-rmg
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