Finland: Financial Sector Assessment Program-Technical Note on Non-Bank Financial Intermediation and Pension Insurance Companies
IMF Staff Country Reports, February 1, 2023
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Bibliographic details
- Published: February 1, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400229893.002
Executive summary and sector scope
- This technical note evaluates non-bank financial institutions (NBFI) as a sector in Finland, with a special focus on the pension insurance companies (PIC).
- Pensions, including the PICs and fund managers, are the most significant parts of the NBFI sector, followed by insurance.
- Publication metadata:
- Date: February 1, 2023
- Pages: 40
- Volume: 2023
- Issue: 064
- Series: Country Report No. 2023/064
- DOI: https://doi.org/10.5089/9798400229893.002
- ISBN: 9798400229893
Key findings: behavior, governance, and supervision
- Market participants value their relationship with the Finnish Financial Supervisory Authority, particularly during crisis periods.
- Market participants noted that extra resources and expertise would be useful for the NBFI sector.
- The Financial Sector Assessment Program analysis reveals a history of procyclical and herding behavior in the PIC portfolios.
- The procyclical and herding behavior is driven by the substance and perception of the solvency regulations, which influence market participant behavior.
- Liquidity risks are assessed as low in the current environment.
Policy analysis and recommendations
- Discussion on further reforms to the 2017 solvency laws should focus on enhancing the long-term purpose of the PICs to generate returns—to the benefit of all social partners and Finnish citizens.
- Even though liquidity risks are low, a liquidity regulation should be developed so that PICs have sufficient buffers for extreme events.
- Strengthening supervisory capacity for the NBFI sector by providing additional resources and expertise to the Finnish Financial Supervisory Authority is recommended to improve crisis response and oversight.
Thematic labels and topics covered
- Subjects: Expenditure, Financial institutions, Financial sector policy and analysis, Insurance, Insurance companies, International organization, Labor, Monetary policy, Pension spending, Pensions, Solvency
- Keywords: Europe, finance disclosure Regulation, FSAP's finding, Global, Insurance, Insurance companies, investment allocation, Pension insurance company, pension insurance company Market, Pension spending, Pensions, PIC asset allocation, PIC equity investment, Solvency
Source: Finland: Financial Sector Assessment Program-Technical Note on Non-Bank Financial Intermediation and Pension Insurance Companies (IMF Staff Country Reports 2023, 064), February 1, 2023.
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- 1finea2023006