Sectoral Interconnectedness in Portugal and the Role of Non-Bank Financial Institutions

This paper explores the structure, evolution, and systemic implications of sectoral interconnectedness within the Portuguese financial system, with particular attention to the role of non-bank financial institutions (NBFIs). Using detailed quarterly whom-to-whom financial accounts from 2013 to 2024, we construct a weighted, directed, temporal multilayer network covering twelve institutional sectors and nine financial instruments. The analysis combines system-wide metrics, layer-specific topology, node-level centrality, and communitydetection methods to characterize the architecture of financial linkages over time. Results show that the Portuguese network is highly dense and remarkably stable over time, with financial intermediation dominated by a small set of core sectors, namely non-financial corporations, banks, households, government, and the rest of the world. Although NBFIs represent a relatively small share of total exposures, several subsectors—particularly insurance corporations, pension funds, and captive financial institutions—play specialized roles within specific instrument layers. Community analysis reveals three persistent modules: an external and official market-finance block, a domestic intermediation core, and a corporate equity and intra-group finance cluster. The integration of IIP and WtW data through a two-mode geography–instrument network further reveals the Rest of the World (RoW) as a structurally central funding and shock-transmission hub, organized around three coherent cross-border channels, showing that external exposures are key to the architecture of the multilayer system. Overall, the findings underscore the importance of multilayer network perspectives for macroprudential surveillance and for understanding how instrument-specific structures shape systemic risk in bank-centric financial systems.