Banking regulation can help discipline the non-bank sector through the relationship between dealers and asset managers, research published by the Bank for International Settlements finds.

In Asset managers, market liquidity and bank regulation, Iñaki Aldasoro, Wenqian Huang and Nikola Tarashev challenge the conventional narrative that bank regulation can worsen non-bank instability. They acknowledge that asset managers may be prone to “redemption shocks” that trigger fire sales, but say bank