IDEAS home Printed from https://ideas.repec.org/b/bis/bisbps/129.html
   My bibliography  Save this book

The role of non-bank financial institutions in cross-border spillovers

Author

Listed:
  • Egemen Eren
  • Philip Wooldridge

Abstract

The growing presence of non-bank financial institutions (NBFIs) helps to develop financial markets, yet it can also impact a country’s vulnerability to cross-border spillovers. The risk of cross-border spillovers is especially acute for NBFIs’ dollar positions. Other potential sources of spillovers include currency and liquidity mismatches on NBFIs’ balance sheets, NBFIs’ use of leverage, and herding. Evidence about whether the greater involvement of NBFIs has aggravated the procyclicality and intensity of cross-border spillovers is mixed.

Suggested Citation

  • Egemen Eren & Philip Wooldridge, 2022. "The role of non-bank financial institutions in cross-border spillovers," BIS Papers, Bank for International Settlements, number 129, November.
    • Handle: RePEc:bis:bisbps:129
    as

    Download full text from publisher

    File URL: http://www.bis.org/publ/bppdf/bispap129.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: http://www.bis.org/publ/bppdf/bispap129.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Inaki Aldasoro & Wenqian Huang & Esti Kemp, 2020. "Cross-border links between banks and non-bank financial institutions," BIS Quarterly Review, Bank for International Settlements, September.
    2. Matteo Maggiori & Brent Neiman & Jesse Schreger, 2020. "International Currencies and Capital Allocation," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2019-2066.
    3. Boris Hofmann & Ilhyock Shim & Hyun Song Shin, 2020. "Emerging market economy exchange rates and local currency bond markets amid the Covid-19 pandemic," BIS Bulletins 5, Bank for International Settlements.
    4. Cerutti, Eugenio & Claessens, Stijn & Puy, Damien, 2019. "Push factors and capital flows to emerging markets: why knowing your lender matters more than fundamentals," Journal of International Economics, Elsevier, vol. 119(C), pages 133-149.
    5. Chotibhak Jotikasthira & Christian Lundblad & Tarun Ramadorai, 2012. "Asset Fire Sales and Purchases and the International Transmission of Funding Shocks," Journal of Finance, American Finance Association, vol. 67(6), pages 2015-2050, December.
    6. Xiang Fang & Bryan Hardy & Karen K Lewis, 2025. "Who Holds Sovereign Debt and Why It Matters," The Review of Financial Studies, Society for Financial Studies, vol. 38(8), pages 2326-2361.
    7. Robert N McCauley & Patrick McGuire & Philip Wooldridge, 2021. "Seven decades of international banking," BIS Quarterly Review, Bank for International Settlements, September.
    8. Stijn Claessens & Ulf Lewrick, 2022. "Open-ended bond funds: Systemic risks and policy implications," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 72(01), pages 45-62, December.
    9. Joaquín Vial, 2020. "Financial market developments in Chile," BIS Papers chapters, in: Bank for International Settlements (ed.), Financial market development, monetary policy and financial stability in emerging market economies, volume 113, pages 67-82, Bank for International Settlements.
    10. Patrick McGuire & Ilhyock Shim & Hyun Song Shin & Vladyslav Sushko, 2021. "Outward portfolio investment and dollar funding in emerging Asia," BIS Quarterly Review, Bank for International Settlements, December.
    11. Valentina Bruno & Hyun Song Shin, 2015. "Cross-Border Banking and Global Liquidity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(2), pages 535-564.
    12. Peter Hördahl & Ilhyock Shim, 2020. "EME bond portfolio flows and long-term interest rates during the Covid-19 pandemic," BIS Bulletins 18, Bank for International Settlements.
    13. Egemen Eren & Philip Wooldridge, 2021. "Non-bank financial institutions and the functioning of government bond markets," BIS Papers, Bank for International Settlements, number 119, November.
    14. Stefan Avdjiev & Egemen Eren & Patrick McGuire, 2020. "Dollar funding costs during the Covid-19 crisis through the lens of the FX swap market," BIS Bulletins 1, Bank for International Settlements.
    15. Aldasoro, Iñaki & Ehlers, Torsten & Eren, Egemen, 2022. "Global banks, dollar funding, and regulation," Journal of International Economics, Elsevier, vol. 137(C).
    16. Carol Bertaut & Beau Bressler & Stephanie E Curcuru, 2019. "Globalization and the geography of capital flows," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Are post-crisis statistical initiatives completed?, volume 49, Bank for International Settlements.
    17. Stefan Avdjiev & Wenxin Du & Cathérine Koch & Hyun Song Shin, 2019. "The Dollar, Bank Leverage, and Deviations from Covered Interest Parity," American Economic Review: Insights, American Economic Association, vol. 1(2), pages 193-208, September.
    18. Carol C. Bertaut & Beau Bressler & Stephanie E. Curcuru, 2019. "Globalization and the Geography of Capital Flows," FEDS Notes 2019-09-06, Board of Governors of the Federal Reserve System (U.S.).
    19. Jefferson Duarte & Francis A. Longstaff & Fan Yu, 2007. "Risk and Return in Fixed-Income Arbitrage: Nickels in Front of a Steamroller?," The Review of Financial Studies, Society for Financial Studies, vol. 20(3), pages 769-811.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fricke, Daniel & Greppmair, Stefan & Paludkiewicz, Karol, 2024. "You can’t always get what you want (where you want it): Cross-border effects of the US money market fund reform," Journal of International Economics, Elsevier, vol. 147(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mert Onen & Hyun Song Shin & Goetz von Peter, 2023. "Overcoming original sin: insights from a new dataset," BIS Working Papers 1075, Bank for International Settlements.
    2. Boermans, Martijn A. & Burger, John D., 2023. "Fickle emerging market flows, stable euros, and the dollar risk factor," Journal of International Economics, Elsevier, vol. 142(C).
    3. Bank for International Settlements, 2021. "Changing patterns of capital flows," CGFS Papers, Bank for International Settlements, number 66, december.
    4. Anusha Chari & Karlye Dilts Stedman & Christian T. Lundblad, 2020. "Capital Flows in Risky Times: Risk-On / Risk-Off and Emerging Market Tail Risk," Research Working Paper RWP 20-08, Federal Reserve Bank of Kansas City.
    5. Bank for International Settlements, 2020. "US dollar funding: an international perspective," CGFS Papers, Bank for International Settlements, number 65, december.
    6. Matteo Aquilina & Giulio Cornelli & Nikola Tarashev, 2025. "Commonality under pressure: banks and funds," BIS Quarterly Review, Bank for International Settlements, March.
    7. Goldberg, Linda S. & Krogstrup, Signe, 2023. "International capital flow pressures and global factors," Journal of International Economics, Elsevier, vol. 146(C).
    8. Fraiberger, Samuel P. & Lee, Do & Puy, Damien & Ranciere, Romain, 2021. "Media sentiment and international asset prices," Journal of International Economics, Elsevier, vol. 133(C).
    9. Krogstrup, Signe & Tille, Cédric, 2018. "Foreign currency bank funding and global factors," Kiel Working Papers 2104, Kiel Institute for the World Economy (IfW Kiel).
    10. Lu, Dong & Liu, Jialin & Zhou, Hang, 2022. "Global financial conditions, capital flows and the exchange rate regime in emerging market economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    11. Choi, Sangyup & Ciminelli, Gabriele & Furceri, Davide, 2023. "Is domestic uncertainty a local pull factor driving foreign capital inflows? New cross-country evidence," Journal of International Money and Finance, Elsevier, vol. 130(C).
    12. Bryan Hardy & Goetz von Peter, 2023. "Global liquidity: a new phase?," BIS Quarterly Review, Bank for International Settlements, December.
    13. repec:bdi:wptemi:misp_033_23 is not listed on IDEAS
    14. Goswami, Mangal & Pontines, Victor & Mohammed, Yassier, 2023. "Portfolio capital flows and the US dollar exchange rate: Viewed from the lens of time and frequency dynamics of connectedness," International Review of Financial Analysis, Elsevier, vol. 89(C).
    15. Sebnem Kalemli-Ozcan & Xiaoxi Liu & Ilhyock Shim, 2021. "Exchange Rate Fluctuations and Firm Leverage," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(1), pages 90-121, March.
    16. Ines Buono & Flavia Corneli & Enrica Di Stefano, 2024. "Capital inflows to emerging countries and their sensitivity to the global financial cycle," International Finance, Wiley Blackwell, vol. 27(1), pages 17-34, April.
    17. Cerutti, Eugenio & Claessens, Stijn & Puy, Damien, 2019. "Push factors and capital flows to emerging markets: why knowing your lender matters more than fundamentals," Journal of International Economics, Elsevier, vol. 119(C), pages 133-149.
    18. Forbes, Kristin & Friedrich, Christian & Reinhardt, Dennis, 2023. "Stress relief? Funding structures and resilience to the covid shock," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 47-81.
    19. Salih Fendoğlu & Eda Gülşen & José-Luis Peydró, 2019. "Global Liquidity and Impairment of Local Monetary Policy," Working Papers 1131, Barcelona School of Economics.
    20. Lee, Jieun, 2024. "Dollar and government bond liquidity: Evidence from Korea," Journal of International Economics, Elsevier, vol. 152(C).
    21. Avdjiev, Stefan & Burger, John & Hardy, Bryan, 2025. "New spare tires: local currency credit as a global shock absorber," Journal of International Money and Finance, Elsevier, vol. 158(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bis:bisbps:129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.