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Journal of Banking & Finance Vol. 134 2022

Mapping exposures of EU banks to the global shadow banking system

Jorge Abad1; Marco D’Errico2; Neill Killeen3; Vera Luz4; Tuomas Peltonen5; Richard Portes6,7; Teresa Urbano8

1 Bank of Spain · 2 University of Zurich · 3 Central Bank of Ireland · 4 Banco de Portugal · 5 European Systemic Risk Board Secretariat, Germany · 6 Regent's University London · 7 London Business School · 8 European Banking Authority, France

Abstract

This paper provides a unique snapshot of the asset exposures of EU banks to shadow banking entities within the global financial system. Drawing on a rich and novel dataset, we show that 60% of the EU banks’ exposures are towards non-EU entities, particularly US-domiciled shadow banking entities. We assess the degree of concentration across different types of shadow banking counterparties. We show that while banks’ exposures are diversified at the individual level, this diversification leads to high overlap across different types of shadow banking entities, with consequent systemic risk. We also examine how bank- and country-level characteristics relate to the exposures of EU banks to shadow banking entities. Our results emphasise the importance of monitoring these cross-border and cross-sector exposures and closing remaining data gaps.

DOI
10.1016/j.jbankfin.2021.106168
Volume
134
Pages
106168
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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