Non-bank financial institution


Non-bank financial institution

A non-bank financial institution (NBFI) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market brokering.[1] Examples of these include insurance firms, pawn shops, cashier's check issuers, check cashing locations, currency exchanges, and microloan organizations.[2][3][4] Alan Greenspan has identified the role of NBFIs in strengthening an economy, as they provide "multiple alternatives to transform an economy's savings into capital investment [which] act as backup facilities should the primary form of intermediation fail."[5]

Contents

In Asia

According to the World Bank, approximately 30% total assets of South Korea's financial system was held in NBFIs as of 1997.[6] In this report, the lack of regulation in this area was claimed to be one reason for the 1997 Asian Financial Crisis.

In the United States

In 1996, the NBFI sector accounted for approximately $200 billion in transactions in the United States.[7]

See also

References

  1. ^ Carmichael, Jeffrey, and Michael Pomerleano. Development and Regulation of Non-Bank Financial Institutions. World Bank Publications, 2002, 12.
  2. ^ Non-Bank Financial Institutions:A Study of Five Sectors
  3. ^ NZ Financial Dictionary, http://www.anz.com/edna/dictionary.asp?action=content&content=non-bank_financial_institution
  4. ^ Legal Service Commission, Law Handbook Online, "Non-bank financial institutions" http://www.lawhandbook.sa.gov.au/ch07s05s06s03.php
  5. ^ FRB: Speech, Greenspan - Do efficient financial markets mitigate crises? - October 19, 1999
  6. ^ Carmichael, Jeffrey, and Michael Pomerleano. Development and Regulation of Non-Bank Financial Institutions. World Bank Publications, 2002, 19.
  7. ^ Non-Bank Financial Institutions: A Study of Five Sectors, http://osdbu.treas.gov/cooply.html



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