Measuring Global Flow of Funds: Dynamics of Portfolio Investment Among G-20 Countries

Nan Zhang ()
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Nan Zhang: Hiroshima Shudo University, Faculty of Economic Sciences

Chapter Chapter 9 in Flow of Funds Analysis, 2020, pp 323-368 from Springer

Abstract: Abstract This study establish a GFF statistical matrix for the G20, which can be used to evaluate the financial risks and influences among its members, and to estimate bilateral exposures between countries for three different financial instruments within and across the G20 economies. We use a financial network analysis to construct an empirical analysis of financial relationships within the G20, focusing on the effects of a shock to portfolio investments in the United States, China, and Japan. We use who-to-whom (W-to-W) matrices to study the local propagation dynamics of shocks in investment and financing for the three countries. To that aim, we propose a decomposition of shocks into n-order effects on the basis of an “inverse of Leontief” representation of the W-t-W matrices. We further propose an eigenvector decomposition of the effects to provide an analytical description of the propagation process.

Keywords: Global flow of funds; Who-to-whom matrices; Inverse of leontief; Cross-border exposures; Financial networks; Financial stability (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-7720-8_9

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DOI: 10.1007/978-981-15-7720-8_9

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