Structural developments in global financial intermediation: The rise of debt and non-bank
credit intermediation
This paper examines global credit intermediation through the lens of financial markets
and financial intermediaries in the post-crisis period during which highly accommodative
monetary policies contributed to investors’ search for yield. It reviews the extent
to which non-bank intermediation contributed to the rise of sovereign and corporate
debt levels and exuberance in global credit markets. It also assesses forms of market-based
finance that are contributing to financial vulnerabilities, including leverage loans
and collateralised loan obligations (CLOs), fixed-income investment funds, and bank
contingent convertible debt. Post-crisis policy frameworks should adapt to the shift
toward market-based finance in many countries to allow better consideration of the
interactions between monetary, prudential, and regulatory tools with respect to credit
intermediation and risks. Policies should also consider the optimal combination of
macroprudential and activities-based tools in non-bank credit intermediation to address
vulnerabilities without undermining the benefits of market-based finance.
Published on March 30, 2020
In series:OECD Working Papers on Finance, Insurance and Private Pensionsview more titles