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Key linkages between banks and the non-bank financial sector

Author

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

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

Suggested Citation

  • Franceschi, Emanuele & Grodzicki, Maciej & Kagerer, Benedikt & Kaufmann, Christoph & Lenoci, Francesca & Mingarelli, Luca & Pancaro, Cosimo & Senner, Richard, 2023. "Key linkages between banks and the non-bank financial sector," Financial Stability Review, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:fsrart:2023:0001:2
    Note: 1486549
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    File URL: https://www.ecb.europa.eu//pub/financial-stability/fsr/special/html/ecb.fsrart202305_02~1ff06bc324.en.html
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    Cited by:

    1. Bryan Hardy & Sonya Zhu, 2023. "Unpacking international banks' deposit funding," BIS Quarterly Review, Bank for International Settlements, September.

    More about this item

    Keywords

    Banks; non-bank financial intermediation; sectoral interlinkages;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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