What are examples of non-banks? Nonbank financial institutions (NBFIs) or Shadow Banking
What are examples of non-banks? Nonbank financial institutions (NBFIs) or Shadow Banking
What is the NBFI?
NBFIs are financial institutions that provide banking-like services but do not hold a banking license. NBFI includes all financial institutions that are not banks, central banks, or public financial institutions. These entities are typically grouped into four categories:
1. Other Financial Intermediaries (OFIs)
Entities involved in credit intermediation and market-based finance:
Money Market Funds (MMFs)
Fixed Income Funds
Mixed Funds
Credit Hedge Funds
Real Estate Investment Funds
Exchange-Traded Funds (ETFs)
Broker-Dealers
Securities Finance Companies
Finance Companies (FinCos)
Leasing and Factoring Companies
Consumer Credit Companies
Structured Finance Vehicles (SFVs)
Securitisation Vehicles
Trust Companies
Central Counterparties (CCPs)
Investment Trusts
2. Insurance Corporations (ICs)
Institutions providing risk transfer and protection services:
Life Insurance Companies
Non-life (General) Insurance Companies
Reinsurance Companies
3. Pension Funds (PFs)
Institutions managing retirement savings and long-term investment:
Public Pension Funds
Private Pension Funds
Occupational/Corporate Pension Schemes
4. Financial Auxiliaries
Supporting financial activities but not engaging in core intermediation:
Financial Advisors and Consultants
Asset Managers and Investment Advisors
Custodian Banks (when not considered part of banks)
Rating Agencies (in some jurisdictions)
Financial Data Providers
NBFI or Shadow Banking
The Financial Stability Board (FSB) began monitoring non-bank credit intermediation after the 2008 global financial crisis. These activities were labeled "shadow banking", referring to financial entities and activities outside the regular banking system but performing bank-like functions.In 2018, the FSB replaced the term shadow banking with Narrow Measure of Non-Bank Financial Intermediation (NBFI).
However, FSB definition is a little complex.
The diagram above visually illustrates the hierarchical relationship between:
NBFI (Non-Bank Financial Intermediation) – 🔵 The broadest category
Includes all non-bank financial institutions:
OFIs (Other Financial Intermediaries)
Insurance companies
Pension funds
Financial auxiliaries
OFI (Other Financial Intermediaries) – 🟢 A subset within NBFI
Excludes insurance and pension funds
Includes entities such as money market funds, hedge funds, broker-dealers, finance companies, and structured finance vehicles
Narrow Measure (Shadow Banking) – 🔴 A risk-focused subset of OFIs
Comprises those OFIs involved in systemically risky credit intermediation (e.g., with leverage, liquidity/maturity transformation)
Classified using FSB’s five Economic Functions (EF1–EF5)
Narrow Measure(Shadow Banking) of Nonbank Financial Intermediation
The following table presents the Financial Stability Board's (FSB) classification of nonbank financial intermediation, known as the "narrow measure (Shadow Banking)" It is part of the FSB’s Global Monitoring Report and groups entities based on their economic functions (EF1–EF5).
Total size: $70.2 trillion
EF1 – Collective Investment Vehicles
Examples: MMFs, fixed income funds, hedge funds, real estate funds
Size: $52.0 trillion
Share: 74.1% (largest segment)
EF2 – Lending Dependent on Short-Term Funding
Examples: Finance companies, leasing/factoring companies
Size: $6.0 trillion
Share: 8.5%
EF3 – Market Intermediation Dependent on Short-Term Funding
Examples: Broker-dealers, custodians, securities finance firms
Size: $4.9 trillion
Share: 7.0%
EF4 – Credit Insurance & Guarantees
Examples: Monoline insurers, credit insurers, guarantors
Size: $0.1 trillion
Share: 0.2%
EF5 – Securitisation-Based Credit Intermediation
Examples: Structured finance, securitisation vehicles, ABS
Size: $5.3 trillion
Share: 7.5%
Unallocated (Other Financial Auxiliaries)
Examples: Not specifically classified
Size: $1.9 trillion
Share: 2.6%
NBFI as a share of total global financial assets
The chart shows NBFIs as their assets have outgrown those of banks, especially in the most recent two decades. As of end-2023, the Non-Bank Financial Intermediation (NBFI) sector held $238.8 trillion in assets—49.1% of total global financial assets. This growth underscores the increasing importance of non-bank finance in the global financial system, particularly in credit intermediation, investment management, and market-based financing.
Narrow Measure of NBFI by Country
In 2023, the United States led globally in the narrow measure of Narrow Measure Non-Bank Financial Intermediation (Shadow Banking) with $22.21 trillion, accounting for the largest concentration of entities engaged in credit intermediation activities that may pose systemic risks. China followed with $10.29 trillion, and the Cayman Islands ranked third with $9.47 trillion, reflecting its role as a major offshore financial center.
NBFIs heavily rely on banks to fund their activities
Their growth depends on banks providing the funding and liquidity support necessary for NBFIs to provide intermediation services. A key observation is that nonbank financial intermediation involves significant liquidity and funding risk. Managing these risks well requires access to stable short-term funding, and likewise access to contingent sources of liquidity, especially access to funding under stress1.2345
This table shows the interconnections between banks and non-bank financial institutions (NBFIs) in terms of who holds whose liabilities — for Q1 2023. Broker/Dealers issued $5.43 trillion in liabilities (You need to look at the article), of which: $1.37 trillion (25%) was held by banks, indicating strong bank funding. Overall, the table reveals that NBFIs heavily rely on banks to fund their activities, especially broker-dealers and ABS issuers.
Federal Reserve and proprietary loan-level data indicates that the growth of private credit has been funded largely by bank loans and that banks have become a key source of liquidity, in the form of credit lines, for PC lenders.6
The volume of private credits
In the United States, the private credit market grew in real terms from $46 billion in 2000 to roughly $1 trillion in 2023.(Fillat,2025)
Videos
Rebecca Maher, Member of FSB Secretariat, presents the main findings of the FSB Global Monitoring Report on Non-Bank Financial Intermediation 2024.
[FMC 2025] The rise of nonbanks in credit markets
Sources
Shadow Banking: Scoping the Issues A Background Note of the Financial Stability Board, Link
Public responses to April 2011 report on Shadow Banking: Scoping the Issues, Link
Do shadow banks create money ? Joe Michell, Link
Towards a theory of shadow money, Daniela Gabor, Link
The rise of nonbanks in credit markets conference
References
Viral V. Acharya, Nicola Cetorelli, and Bruce Tuckman, “Nonbanks Are Growing but Their Growth Is Heavily Supported by Banks,” Federal Reserve Bank of New York Liberty Street Economics, June 17, 2024, Link
Viral V. Acharya, Nicola Cetorelli, and Bruce Tuckman, “Banks and Nonbanks Are Not Separate, but Interwoven,” Federal Reserve Bank of New York Liberty Street Economics, June 18, 2024, https://libertystreeteconomics.newyorkfed.org/2024/06/banks-and-nonbanks-are-not-separate-but-interwoven/
Viral V. Acharya, Nicola Cetorelli, and Bruce Tuckman, “The Growing Risk of Spillovers and Spillbacks in the Bank‑NBFI Nexus,” Federal Reserve Bank of New York Liberty Street Economics, June 20, 2024, https://libertystreeteconomics.newyorkfed.org/2024/06/the-growing-risk-of-spillovers-and-spillbacks-in-the-bank-nbfi-nexus/
WHERE DO BANKS END AND NBFIS BEGIN?,Viral V. Acharya Nicola Cetorelli Bruce Tuckman Working Paper 32316 http://www.nber.org/papers/w32316
Cetorelli, Nicola, Gonzalo Cisternas, and Asani Sarkar. 2024. “Coexistence of Banks and Non-Banks: Intermediation Functions and Strategies.” Federal Reserve Bank of New York Staff Reports, no. 1145, September. https://doi.org/10.59576/sr.1145
Excellent 👌 I love this layout.