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472 - Non-bank financial institutions: assessment of their impact on the stability of the financial system

Patrice Muller, Graham Bishop, Shaan Devnani, Mark Lewis and Rohit Ladher (London Economics)

Non-bank financial institutions: assessment of their impact on the stability of the financial systempdf(3 MB) Choose translations of the previous link 

Summary for non-specialistspdf(50 kB) Choose translations of the previous link 


The study paper examines how non-bank financial institutions (in particular money market funds, private equity firms, hedge funds, pension funds and insurance undertakings, central counterparties, and UCITS and ETFs) have performed over the last decade and during the financial crisis. The report addresses the risks run by each of this type of institutions (credit, counterparty, liquidity, redemption, and fire sales risk), and highlights also the risks arising from a number of activities frequently undertaken by these institutions, in particular securitisation (a.o. agency risk), securities lending (a.o. counterparty risk) and repos (a.o. liquidity risk).

The report finally provides a selected overview of approaches for the measurement of financial instability and financial distress.

(European Economy. Economic Papers. 472. November 2012. Brussels. PDF. 261pp. Tab. Graph. Ann. Free.)

KC-AI-12-472-EN-N (online)
ISBN 978-92-79-22993-0 (online)
doi:10.2765/27776 (online)

JEL classification: G23

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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