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In this post, I look at how the term non-bank has been used in NBER working papers over time and why it has come to mean very different things in different contexts. By scraping papers that explicitly use the term, I trace how “non-bank” shifts from a narrow description of shadow banking to a broad residual category that often obscures more than it clarifies. I thank Olivier Darmouni for inspiration.

Introduction

The term non-bank appears frequently in modern finance and macro-finance research, but its meaning is not always the same across papers.

In some contexts, non-banks refer to asset managers such as hedge funds or money market funds. In others, the term includes broker-dealers, securitization vehicles, fintech lenders, or real estate investment trusts. In still other cases, non-bank is used as a broad category for financial intermediation that takes place outside the traditional banking sector.

Methodology

I collect all NBER working papers whose title or abstract contains the terms "non-bank," "non-banks," "nonbank," or "nonbanks," using a case-insensitive search. This yields a corpus of papers where the authors themselves explicitly chose to invoke the term, rather than papers that implicitly study non-bank institutions without naming them as such.

I then assign each paper to one or more categories based on the type of institution that the term "non-bank" is used to describe. I identify six main categories:

1. Asset managers that directly hold risky claims - Hedge funds, mutual funds, pension funds, and other institutions that directly invest in securities and bear market risk on their balance sheets.
2. Cash-like intermediaries and liquidity vehicles - Money market funds, repos, and other institutions providing deposit-like services or short-term funding markets.
3. Fintech and platform-based lenders - Online lenders, peer-to-peer platforms, and other technology-enabled credit providers that emerged prominently in the 2010s.
4. Securitization and structured vehicles - Special purpose vehicles, CDOs, and other entities created to pool and repackage financial claims.
5. Real-asset intermediaries with financial leverage - REITs and other institutions that hold physical assets while using financial leverage.
6. Residual category: NBFIs in macro and policy work - Papers that use "non-bank" as a catch-all for everything that isn't a traditional deposit-taking bank, often in macro models or policy discussions.