Shockwaves across borders: Did the 2023 banking crisis reshape global banking sector linkages?

Chun-Sung Huang and Ailie Charteris

Finance Research Letters, 2025, vol. 82, issue C

Abstract: We investigate the impact of the 2023 banking crisis, the most significant banking system turmoil since the Global Financial Crisis (GFC), on co-movement between the United States (U.S.) and global banking sectors. Using wavelet coherence and beta regressions, we find strong contagion during the crisis. The crisis primarily impacted co-movement through a change in U.S. monetary policy and heightened risk perceptions. Post-crisis, interdependence weakened, although contagion persisted for some countries. Our results highlight the success of post-GFC reforms and swift government and central bank interventions in containing systemic risk during the crisis and suggest increased post-crisis diversification opportunities for investors.

Keywords: Wavelet coherence; Co-movement; Contagion; Interdependence; Banking crisis; Determinants; Beta regression (search for similar items in EconPapers)
JEL-codes: C58 G01 G15 G21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:82:y:2025:i:c:s154461232500830x

DOI: 10.1016/j.frl.2025.107571

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