Global Banking Network and Regional Financial Contagion
Publication | May 2018
This paper looks at how the network of cross-border banking appears to play an important role in financial contagion and how shocks are transmitted across borders.
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This paper investigates and tests the role of regional exposures in financial contagion from advanced to emerging market economies through the global banking network using data on cross-border bilateral bank claims and liability positions. Results indicate that direct exposures of a country’s own and the overall region’s banking sectors to crisis-affected countries are systematically related to bank capital outflows during the global financial crisis. A further analysis suggests more favorable behavior of the same region lender toward emerging economies during crisis.
Contents
- Introduction
- Bilateral Bank Claims Data and Their Regional Decomposition
- Regional Contagion of Vulnerabilities
- Empirical Findings
- Conclusion
- Appendix
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