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Structural developments in global financial intermediation: The rise of debt and non-bank credit intermediation

Robert Patalano and Caroline Roulet
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Robert Patalano: OECD
Caroline Roulet: OECD

No 44, OECD Working Papers on Finance, Insurance and Private Pensions from OECD Publishing

Abstract: This paper examines global credit intermediation through the lens of financial markets and financial intermediaries in the post-crisis period during which highly accommodative monetary policies contributed to investors’ search for yield. It reviews the extent to which non-bank intermediation contributed to the rise of sovereign and corporate debt levels and exuberance in global credit markets. It also assesses forms of market-based finance that are contributing to financial vulnerabilities, including leverage loans and collateralised loan obligations (CLOs), fixed-income investment funds, and bank contingent convertible debt. Post-crisis policy frameworks should adapt to the shift toward market-based finance in many countries to allow better consideration of the interactions between monetary, prudential, and regulatory tools with respect to credit intermediation and risks. Policies should also consider the optimal combination of macroprudential and activities-based tools in non-bank credit intermediation to address vulnerabilities without undermining the benefits of market-based finance.

Keywords: debt sustainability; International lending; international policy mix; non-bank financial intermediation (search for similar items in EconPapers)
JEL-codes: F34 F42 G21 G23 (search for similar items in EconPapers)
Date: 2020-03-30
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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