 Credit risk and financial integration: An application of network analysisMita Bhattacharya, John Inekwe and Maria Rebecca Valenzuela International Review of Financial Analysis, 2020, vol. 72, issue C Abstract: Credit plays a significant role in the performance of the banking sector. This research relates financial integration to the credit risk of banks. We compute a measure of financial connectivity based on network statistics using syndicated loans. Using instrumental variable techniques for a panel of 39 countries over the periods of 1988 to 2014, we analyse the link between credit risk and financial integration. Our findings suggest that borrowing banks do not alleviate credit risk. Also, borrowing banks that are more active in the network also help to compound credit risk. However, the closeness centrality reveals a significant reduction in the credit risk of the borrowing banks. Our findings from individual countries reflect the significance of the country of operation of these banks in the international market. Keywords: Finance; Interbank lending; Financial networks; Financial markets; Credit risk (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:72:y:2020:i:c:s1057521920302325 DOI: 10.1016/j.irfa.2020.101588 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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