Banking across Borders in Luxembourg

Gabriele Di Filippo

No 166, BCL working papers from Central Bank of Luxembourg

Abstract: This paper examines the role of Luxembourg in the international banking system through the Locational Banking Statistics compiled by the Bank for International Settlements. Across European countries, Luxembourg features the largest cross-border banking positions relative to GDP. Indeed, Luxembourg is a small open economy with an international financial centre, whose banking sector consists mostly of foreign-controlled banks. The cross-border banking positions focus on loans and deposits between banks and notably intragroup positions. The geographical counterparts of cross-border banking positions in Luxembourg are mainly Western European countries (especially the euro area) and North America (notably the United States), whether for claims or liabilities. By order of importance, the main country counterparts are Germany, France, Great Britain, Switzerland, Italy, the United States, the Netherlands and Belgium. Within the international banking network, the importance of cross-border banking positions in Luxembourg resembles that of Belgium, Ireland, Japan and the Netherlands. These countries feature fewer connections than the United States, Germany and France. At the top of the network, Great Britain stands as the leading international banking centre. The structure of the international banking network evolves over time. During periods of financial stress, the density of connections stagnates or diminishes and the network becomes less resilient. This was notably the case during the global financial crisis of 2007-2008 and the European sovereign debt crisis of 2010-2012. Over time, the international banking network became more fragmented with more communities developing. This suggests a regionalisation of cross-border banking flows, as cross-border banking activity becomes more concentrated within specific groups of countries.

Keywords: Cross-border banking positions; BIS Locational Banking Statistics; Network analysis (search for similar items in EconPapers)
JEL-codes: E50 F30 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2022-09
New Economics Papers: this item is included in nep-ban, nep-eec and nep-net
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bcl.lu/en/publications/Working-papers/166/BCLWP166.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bcl:bclwop:bclwp166

Access Statistics for this paper

More papers in BCL working papers from Central Bank of Luxembourg Contact information at EDIRC.
Bibliographic data for series maintained by ().