Discussion paper

DP11919 Mapping the interconnectedness between EU banks and shadow banking entities

This paper provides a unique snapshot of the exposures of EU banks to shadow
banking entities within the global financial system. Drawing on a rich and novel
dataset, the paper documents the cross-sector and cross-border linkages and considers
which are the most relevant for systemic risk monitoring. From a macroprudential
perspective, the identification of potential feedback and contagion channels
arising from the linkages of banks and shadow banking entities is particularly challenging
when shadow banking entities are domiciled in different jurisdictions. The
analysis shows that many of the EU banks’ exposures are towards non-EU entities,
particularly US-domiciled shadow banking entities. At the individual level, banks’
exposures are diversified although this diversification leads to high overlap across
different types of shadow banking entities.

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Citation

Portes, R, M D'Errico, N Killeen, V Luz, T Peltonen and T Urbano (2017), ‘DP11919 Mapping the interconnectedness between EU banks and shadow banking entities‘, CEPR Discussion Paper No. 11919. CEPR Press, Paris & London. https://cepr.org/publications/dp11919