The geographical composition of national external balance sheets: 1980-2005

Chris Kubelec () and Filipa Sa ()
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Chris Kubelec: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH

No 384, Bank of England working papers from Bank of England

Abstract: This paper constructs a data set on stocks of bilateral external assets and liabilities for a group of 18 countries, including developed and emerging economies. The data set covers the years 1980 to 2005 and distinguishes between four asset classes: foreign direct investment, portfolio equity, debt, and foreign exchange reserves. A number of stylised facts emerge from it. There has been a remarkable increase in interconnectivity over the past two decades. Financial links have become larger and more frequent and countries have become more open. The global financial network is centred around a small number of nodes, which have many and large links. In addition, the network exhibits ‘small-world’ properties, such as high clustering and low average path length. The combination of high interconnectivity, a small number of hubs, and ‘small-world’ properties makes for a robust-yet-fragile system, in which disturbances to the key hubs would be rapidly and widely transmitted. The global financial network is centred around the United States and the United Kingdom, which have large links and are connected to most other countries. This contrasts with the global trade network, which is arranged in three clusters: a European cluster (centred on Germany), an Asian cluster (centred on China), and an American cluster (centred on the United States).

Keywords: International financial networks; international investment; financial liberalisation (search for similar items in EconPapers)
JEL-codes: F20 F30 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2010-03-23
New Economics Papers: this item is included in nep-ifn, nep-opm and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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