Overview
Banking groups can reduce lending through a regulated bank yet preserve part of corporate credit through affiliated NBFIs. This series tests when that shift occurs across rules, markets, countries, and business models, then maps the funding, ownership, and liquidity links that can relocate risk. Evidence is strongest in syndicated lending and does not settle wider stability effects.
Learning outcomes
- Affiliated NBFIs can cushion a bank-subsidiary lending contraction, but not necessarily at group or system scale.
- In the IMF syndicated-loan sample, the baseline offset was about 57% of the bank-only contraction.
- A local rule and a capable affiliate leave more substitution room than a consolidated capital constraint.
- Credit can be preserved while funding, ownership, liquidity, and risk-transfer dependencies remain.
Keywords
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PlansFAQ
How can a banking group move corporate credit after bank regulation tightens?
A banking group can route some lending through an affiliated NBFI when the rule binds the bank subsidiary more directly and the affiliate has capacity and funding. The evidence does not show that every group can do so.
How large is the credit shift in the IMF study?
After a one-standard-deviation tightening, bank subsidiaries cut syndicated lending 1.0%, while affiliated NBFIs rose 1.0% in absolute terms and 2.0% relative to banks; the estimated group offset was about 57%. This is a weighted, market-specific estimate.
When does regulation limit this substitution route?
The route is narrower when the measure is calculated on consolidated capital, the affiliate lacks capacity or funding, or the relevant cross-border market is not established. In the IMF capital-based exercise, NBFI subsidiaries reduced lending 1.4% relative to bank subsidiaries.
Does moving lending to an affiliated NBFI remove financial risk?
No. It changes the legal lender but can leave funding, clearing, market-making, ownership, and risk-transfer links connected; the IMF study does not directly measure the wider stability consequences.