In the aftermath of the 2007-2008 financial crisis, new legislation and regulations have pressured banks and insurance companies to reduce their size, leverage, and riskier lines of business in order to avoid another too-big-to-fail debacle. Nonbank financial intermediaries have naturally taken up some of that slack, and, not surprisingly, regulatory scrutiny has turned toward these intermediaries to evaluate whether they could pose similar risks to financial stability that banks did pre-crisis.

Owing to nonbank intermediaries stunning growth in the past decade, the focus on them centers on asset managers, which include firms offering mutual funds, exchange-traded funds (ETFs), hedge funds, and private equity funds. This report explores whether there is a demonstrable link between the asset management industry and systemic risk.