Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130768
Authors: 
Beck, Günter Wilfried
Kotz, Hans-Helmut
Year of Publication: 
2016
Series/Report no.: 
White Paper Series 37
Abstract: 
Very low policy rates as well as the substantial redesign of rules and supervisory institutions have changed background conditions for the Euro Area's financial intermediary sector substantially. Both policy initiatives have been targeted at improving societal welfare. And their potential side effects (or costs) have been discussed intensively, in academic as well as policy circles. Very low policy rates (and correspondingly low market rates) are likely to whet investors' risk taking incentives. Concurrently, the tightened regulatory framework, in particular for banks, increases the comparative attractiveness of the less regulated, so-called shadow banking sector. Employing flow-of-funds data for the Euro Area's non-bank banking sector we take stock of recent developments in this part of the financial sector. In addition, we examine to which extent low interest rates have had an impact on investment behavior. Our results reveal a declining role of banks (and, simultaneously, an increase in non-bank banking). Overall intermediation activity, hence, has remained roughly at the same level. Moreover, our findings also suggest that non-bank banks have tended to take positions in riskier assets (particularly in equities). In line with this observation, balance-sheet based risk measures indicate a rise in sector-specific risks in the non-bank banking sector (when narrowly defined).
Subjects: 
non-bank financial intermediation
shadow banking
financial stability
systemic risk
financial regulation
low interest rate environment
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.