Do We Still Need Banks? The Evolution of Bank Intermediation since the Global Financial Crisis
The SUERF Policy Brief analyzes evolving bank intermediation and rising NBFI influence since the Global Financial Crisis amidst systemic risks.
What it examines
This study examines the evolution of bank intermediation since the Global Financial Crisis by comparing bank and non-bank roles using empirical evidence and monitoring data. It highlights shifts in lending and trading, regulatory challenges, and banks’ methods to support the real economy during periods of stress.
What it concludes
The study shows banks remain vital for economic stability during crises when non-banks withdraw. Its findings can guide regulators and policymakers in enhancing risk management, designing effective safety nets, and reducing reliance on central bank help. Future research should explore balanced intermediation strategies.
Evidence objects
Although non-bank institutions benefit from lighter oversight and digital trading, traditional banks remain indispensable. They effectively link savers with borrowers while providing crisis safe havens, securing deposits when liquidity dissipates.
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Banks re-intermediate distressed markets by absorbing far-tail risks, intensifying systemic vulnerabilities while bolstering stability. The study, since 2008, employs data, balance sheet comparisons, and stress tests across U.S. and Europe.
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Non-bank institutions challenge traditional banks with simpler models and lighter regulations. The report introduces a novel risk migration concept between banks and NBFIs, quantifying future risks while neglecting long-term impacts.
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Offering a timely review of evolving roles between banks and non-bank financial institutions, the paper synthesizes trends in balance sheet evolution and crisis intermediation. Despite relying on established ideas, its integration of policy insights and empirical data delivers a fresh, compelling perspective on fixed income markets and overall financial stability.
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Raw abstract and provenance
- … purchase programs imply that the market needs to absorb a higher volume of government bonds placing further strain on fixed income markets. These trends together …
Source row: 634 · abstract type: snippet