The Web of Interconnections: Unraveling the Growing Interconnectedness of Non-Bank Financial Institutions

3. Interconnectedness

NBFIs have grown in importance since 2008, implying that their role has increased in both domestic and cross-border capital flows. They have also become more interconnected with the rest of the financial system which significantly increases the complexity of the sector. This could lead to growing vulnerabilities and risks and serve as a shock amplifier. The interconnectedness has not only increased between NBFIs and other financial institutions like banks but also between the different types of NBFIs.

 

OFIs' funding from banks dropped by 4 percentage points as percentage of total assets

Funding from pension funds remained stable and increased from other OFIs

 

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