Efficiency of Non-Bank Financial Institutions in the European Union

Abstract

Abstract: The purpose of the article is to evaluate the performance of non-bank financial institutions in the European Union and to identify structural changes in financial intermediation during the period 2020–2024. The study focuses on investment funds, hedge funds, financial companies, and other financial intermediaries that gradually expanded their presence in the EU capital market. The analysis examines the dynamics of assets, the participation of the non-bank sector in financing non-financial enterprises, and changes in the structure of investment portfolios. The methodological framework combines structural, comparative, and dynamic analysis. Empirical data were processed using economic and statistical methods, grouping techniques, and analytical generalization. The information base consists of indicators describing the activity of non-bank financial institutions in the European Union for the period 2020–2024. The research examines changes in the total assets of the sector, volumes of lending to non-financial enterprises, the dynamics of corporate debt instruments, and the structure of assets under management. The results of the analysis indicate that the total assets of non-bank financial institutions increased from EUR 37.6 trillion to EUR 48.7 trillion. The highest growth occurred in the hedge fund segment, where assets expanded by 50%, while investment fund assets increased by EUR 5.1 trillion. The share of non-bank financing of non-financial enterprises rose from 16.5% to 21.8%. The volume of corporate bonds increased from EUR 0.9 trillion to EUR 1.6 trillion. Within the structure of investment portfolios, the fastest growth occurred in corporate bond investments, while equity portfolios increased to EUR 13.1 trillion. The practical significance of the results lies in the possibility of applying the identified trends to improve regulatory policy and assess the financial stability of the EU non-bank sector. The study demonstrates that the expansion of this segment is accompanied by the accumulation of liquidity risks, financial leverage, and intersectoral financial linkages. The scientific novelty of the research lies in the integrated assessment of asset dynamics, credit participation, and portfolio structure of non-bank financial institutions within a unified analytical framework.