Mapping market-based finance in Ireland

Market-based finance has grown rapidly in recent years – both in Ireland and internationally. This growing form of finance provides a valuable alternative to bank financing, supporting economic activity. But, like all forms of financial intermediation, market-based finance can also contribute to a build-up of financial vulnerabilities, which need to be monitored and – if necessary – addressed. The main contribution of this Note is to provide an overview of the market-based finance sector domiciled in Ireland. It outlines the size, growth and composition of the sector; describes the business models of the main entities involved; and sets outs how the sector is linked to the global economy and financial system. The Note also describes potential sources of vulnerability, which the Central Bank of Ireland – working with other authorities globally – monitors on a regular basis. From a financial stability perspective, a key priority internationally is deepening policymakers’ understanding of the potential implications of a disruption in market-based finance on economic activity in a future period of stress. In addition, further consideration needs to be given to developing and operationalising the macroprudential policy framework for market-based finance.