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The economics of non-bank financial intermediation: why do we need to fill the regulation gap?

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  • Maurizio Trapanese

    (Banca d'Italia)

Abstract

This paper presents an overall analysis of the economics of non-bank financial intermediation, and argues that the financial stability concerns stemming from this sector support the need to fill the regulation gap that exists with respect to other segments. It examines the structure of markets, the economic incentives of the agents involved, and the institutional aspects characterizing this form of intermediation as compared with that performed by banks. The policy framework developed so far has been based mainly on micro-prudential tools, looking at individual institutions and activities. The focus of the regulatory actions should not be (or should not only be) the stability of individual entities. Financial regulators should pay more attention to the effects that the collective actions and activities of non-bank financial entities may have on the financial system as a whole and on the real economy. I find that the effectiveness of micro-prudential tools is strengthened if they are accompanied by a framework containing policy measures to address systemic risk.

Suggested Citation

  • Maurizio Trapanese, 2021. "The economics of non-bank financial intermediation: why do we need to fill the regulation gap?," Questioni di Economia e Finanza (Occasional Papers) 625, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_625_21
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2021-0625/QEF_625_21.pdf
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    Cited by:

    1. Yulia S. Evlakhova & Nataliya A. Amosova, 2022. "Nonbank Financial Intermediation in Times of Crisis: Identifying Leadership in the G20 Countries," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 21(3), pages 426-453.

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    Keywords

    financial crises; international regulation;

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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