Ireland’s shadow banking industry is among the largest in the world at 1,400 per cent of the country’s GDP, a new study has claimed.

A report by the Financial Stability Board (FSB) into so-called shadow banking found that Ireland’s sector was the fourth largest in the world in 2015. The industry was up from $2.03 trillion in 2014 to $2.2 trillion in 2015, putting it behind the US, the Cayman Islands and Japan.

Shadow banking, which has grown in five of the six years since the FSB began collating data on the sector, is described in the report as credit intermediation involving entities and activities outside the regular banking system or non-bank credit intermediation. This includes activities performed by institutions not classified as banks, insurance corporations, pension funds, public financial institutions or central banks.

The FSB report presented the results of its sixth annual monitoring exercise to assess global trends and risks in the shadow banking system and covered 28 jurisdictions across the world.

Mark Carney, the governor of the Bank of England and chair of the FSB, said: “Market-based finance provides important diversification of the funding sources which support the real economy.

“The enhanced and coordinated system-wide monitoring by authorities continues to improve our understanding of non-bank financial activities and risks to the financial system. This helps to inform our judgement on appropriate policy responses as we transform shadow banking into resilient market-based finance.”

In 2015, six jurisdictions – Canada, the Cayman Islands, Ireland, the Netherlands, Switzerland and the UK – featured shadow banking sectors that were more than twice as large as their respective GDP. The US had the largest in 2015 with assets totalling $13.8 trillion, followed by the Cayman Islands with a sector worth $4.3 trillion. Japan’s shadow banking sector was worth $3.2 trillion.

“As shadow banking by its nature continuously evolves and adapts to a new environment, it is important for authorities to continue to improve data availability and risk analysis so as to be able to identify new sources of systemic vulnerabilities in a timely manner,” Klaas Knot, the chair of the FSB committee on assessment of vulnerabilities, said.