The Economic Impact of Non-Banking Financial Institutions and Risk Management in Romania

Abstract

Non-banking financial institutions (NBFI), including microfinance institutions (MFIs), pawnshops, leasing companies, and insurance corporations, have become essential for financing the Romanian economy, contributing to the diversification of funding sources and supporting economic growth. NBFI have demonstrated their ability to provide flexible and accessible financing solutions, particularly during crises. As of the end of 2022, lending activities constituted the majority of NBFI portfolios, with consumer loans being the primary source of household financing. Loans extended to non-financial corporations experienced significant growth, with many denominated in euros. Additionally, there has been an increase in loans granted to non-residents. Between 2019 and 2023, outstanding balances decreased as a percentage of total amounts owed, while the number of debtors with arrears saw a slight increase. In the European context, NBFI have become increasingly important for financing non-financial corporations, indicating a significant rise in the proportion of loans provided by these institutions. These developments underscore the pivotal role of NBFI both domestically and globally.