International Capital Flows in the Post-crisis World, September 2019 CENTRAL BANK OF CHILE  Monetary policy framework and its effectiveness Institutional investors provide a natural base for financial market deepening and market-based FX-risk coverage instruments Main financial assets holders (*)  Derivatives market activity  (percent)  (annual transactions, percent of GDP)  100 90 80 70 60 50 40 30 20 10 0  7  1998  2001  2004  2007  2010  2013  2016  6 5 4 3 2 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018  1  Bank Bds. 0  Sov. Bds. Pension funds  Corp. Bds. Mutual funds  Term-dep Insurance Co.  Stocks Other  Emerging Economies  Latin American Economies  Chile  (*) Other includes other investment funds, stock exchanges, and stock brokers. Source: Central Bank of Chile, based on data from the Superintendence of Pensions, CMF and Santiago Stock Exchange. The ability to overcome the fear of floating was helped with the buildup of capacities for companies and financial intermediaries to manage the risks associated to a more volatile FX. Consequently, derivatives markets were deepened as well as institutional investors provided a natural base for financial market deepening and Page 10 of 12  Central Bank of Chile September 2019  market-based FX-risk coverage instruments. The Chilean financial market has transited from being largely dominated by traditional banking to being composed by several other market participants, including Pension Funds, General Fund Administrators and Insurance Companies; among others.
International Capital Flows in the Post-crisis World, September 2019 CENTRAL BANK OF CHILE  Non-bank lenders  Household debt issued by NBLs has increased as a share of total consumer debt  15  Retailers CCAFs NBLs  13  Real annual growth of loans  Nonbank credit (*)  (real annual change, percent)  (percent of bank consumer loans)  Car dealerships S&Ls  F&Ls Bank  60  Retailers  Car dealerships  F&Ls  CCAFs  S&Ls  50  11 9  40  7 5  30  3 20  1 -1  10  -3 -5  0 13  14  15  16  17  18  13  14  15  16  17  18  (*) Based on individual financial statements, including for bank consumer credit, which is used as the denominator. Source: Central Bank of Chile based on data from the SBIF, CMF and Suseso. The steady growth of the nonbank portfolio is a potential source of vulnerability, given that most of these lenders are outside the consolidated debt perimeter. In terms of arrears in the nonbank consumer portfolio, retailers recorded a slight improvement relative to end-2018, to 3.8%. In contrast, for the CCAFs, delinquency has increased steadily since 2013—when they began to use accounting criteria more similar to the banks—and it is currently more than double the rates for the rest of the nonbank consumer lenders.