We investigate the size and evolution over time of shadow banks in the euro area, with a particular focus on their role in the funding of non-financial corporations (NFCs). Using an institution-based definition of shadow banks, which is consistent with available Eurosystem data, we find that, notwithstanding a significant heterogeneity across countries, the euro-area shadow banking system has grown in importance since the outburst of the global financial crisis. In addition, also its interconnectedness with the regulated banking system has increased over time. An econometric investigation shows that macroeconomic variables are the main determinants of the growth of loans to NFCs.

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This paper develops a methodology for identifying systemically important financial institutions based on that developed by the Basel Committee on Banking Supervision (2011) and used by the Financial Stability Board in its yearly G-SIBs identification. The methodology uses publicly available data to provide fully transparent results with a G-SIBs list that helps to bridge the gap between market knowledge and supervisory decisions. Moreover, the results include a complete ranking of the banks in the sample, according to their systemic importance scores. The methodology is then applied to EU and Eurozone samples of banks to obtain their systemic importance ranking and SIFI lists. This is one of the first methodologies capable of identifying systemically relevant banks at the European level. A statistical analysis and some geographical and historical evidence provide further insight into the notion of systemic importance, its policy implications and the future applications of this methodology.