This chapter empirically analyses the impact of non-bank financial intermediation on bank risk in emerging economies. We start by reviewing literature on non-bank financial intermediation and the propagation of risk in emerging and developing economies. With the global financial crisis in hindsight, we recognize the detrimental effects of financial risk to the economy and seek to evaluate to what extent the development of both financial markets and capital markets threatens financial stability. Using a panel dataset of 14 emerging economies from 2002 to 2022, we find that the growth of shadow banking or non-bank financial intermediation (NBFI) has a non-linear relationship with bank stability. Specifically, an initial increase in NBFI leads to a rise in bank risk, but at higher levels of NBFI, this trend reverses, suggesting that a more developed NBFI sector can eventually stabilize the banking system. Additionally, we find that NBFI activity has a mitigating effect on stock market volatility in these economies, highlighting its complex role in financial stability.