Report: NBFI Sector Growth Slows Compared to Banking

Bringing an end to a 10-year trend, the nonbank financial intermediation sector grew less than banking in 2020, according to a report released today by the Financial Stability Board. The report, which is the 11th such document released by FSB on the topic, monitors trends and vulnerabilities in NBFI, the FSB’s preferred term for “shadow banking.” This installment covered developments for the year ending Dec. 31, 2020.

Total global financial assets increased by 10.9% to $468.7 trillion, according to FSB. This was faster than the global NBFI sector, mainly comprising pension funds, insurance corporations and other financial intermediaries, which experienced asset growth of 7.9%, reaching $226.6 trillion. The faster growth in bank, central bank and public financial institution assets is partly attributable to COVID-19 and governments’ efforts to support economies, including through the banking system, the report noted.

The NBFI sector’s relative share of total global financial assets decreased from 49.7% to 48.3% in 2020, the largest percentage point decrease since the 2008 financial crisis. Notably, asset growth for NBFIs was lower than central banks and banks.