International Finance Corportation (IFC) supported a non-banking financial institution (NFBI) in Ukraine in an attempt to develop the mortgage market and address housing sector challenges in a holistic way by providing long-term funding, supporting underwriting standards, and developing a platform containing alternative funding sources from capital markets. While the NFBI was able to find some success before 2008, NFBIs are very vulnerable to financial crisis.
After 2008, when bond markets shut down, the NFBI had no choice but to change strategy and become a bank – and it soon expanded with multiple branches throughout Ukraine, now holding a recognizable franchise retail lending market. Though NFBIs can seem effective in the short term, their vulnerability to disruption in capital markets mean they have weaknesses that cause issues for their long-term effectiveness.
Source:
World Bank Group. (2016) World Bank Group Support to Housing Finance. International Bank for Reconstruction and Development / The World Bank.
Link: https://ieg.worldbankgroup.org/evaluations/world-bank-group-support-housing-finance