Nonbank Financial Intermediation in Times of Crisis: Identifying Leadership in the G20 Countries

Abstract

Non-banking financial intermediation, which means the conduct of credit operations by financial institutions that do not have a license for this and was previously interpreted as “shadow banking”, has become a long-term trend in the development of the global financial market. The purpose of the study is to determine the changes in non-banking financial intermediation during periods of crises and the inter-crisis period, as well as to identify the leading countries in the development of non-banking financial intermediation in a long-term retrospective. A hypothesis is formulated that during periods of crises, not only does the volume of non-banking financial intermediation decrease (on a global scale and within national markets), but its structure also changes. To test the hypothesis, a cross-country comparative analysis of the level of development of non-banking financial intermediation based on the corresponding index was carried out, as well as clustering using the FOREL method to identify changes in the structure of global non-banking financial intermediation. As data sources, data from the Financial Stability Board Monitoring Dataset on Non-Bank Financial Intermediation and OECD. Stat data were used. The results of the study confirmed the correctness of the formulated hypothesis. On their basis, the directions for the development of non-banking financial intermediaries in the current conditions of the approaching recession of the world economy are determined: (1) maintaining the index of non-banking financial intermediation in the current range of values; (2) preservation of the polycluster structure of non-banking financial intermediation, since the decrease in the number of clusters occurs during periods of relative stability of the world economy; (3) increased heterogeneity of countries in terms of the level of non-banking financial intermediation. It is shown that the crisis caused by the pandemic had a stronger negative impact on non-banking financial intermediation than the global financial crisis. The theoretical significance of the results obtained is to identify the structure of global non-banking financial intermediation, as well as to propose a criterion for countries' leadership in terms of its level. The practical significance lies in the possibility of using the results obtained in the development of measures to ensure the stability of financial markets both at the global and national levels.