  We calculate non-perturbative contributions to Yukawa couplings on D3-branes
at orbifold singularities due to E3 and fractional E(-1) instantons which do
not intersect the visible sector branes. While distant E3 instantons on bulk
cycles typically contribute to Yukawa couplings, we find that distant
fractional E(-1) can also give rise to new Yukawa couplings. However,
fractional E(-1) instantons only induce Yukawa couplings if they are located at
a singularity which shares a collapsed homologous two-cycle with the
singularity supporting the visible sector. The non-perturbative contributions
to Yukawa couplings exhibit a different flavour structure than the tree-level
Yukawa couplings and, as a result, they can be sources of flavour violation.
This is particularly relevant for schemes of moduli stabilisation which rely on
superpotential contributions from E3 instantons, such as KKLT or the Large
Volume Scenario. As a byproduct of our analysis, we shed some new light on the
properties of annulus diagrams with matter field insertions in stringy
instanton calculus.
