EconPapers    
Economics at your fingertips  
 

The Integration of International Financial Markets: An Attempt to Quantify Contagion in an Input-Output-Type Analysis

Dieter Schumacher

No 1554, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The increasing integration of international financial markets means that credit defaults in one country have to be covered by creditors in other countries. If the principle of creditor liability were applied systematically, the financial losses incurred by the financial institution that provided the credit and is thus directly affected by the default would be “passed on” through its domestic and foreign shareholders and debt holders, as well as their creditors, to the original savers. In this paper, this contagion effect will be estimated by taking international capital linkages into account. Analogously to an input-output analysis of interindustry linkages, savings used for investments in one country are traced back to the countries from which the funds originated. This also reveals the important role of international financial centers, which essentially serve as distributors of investment risks, while the financial losses are ultimately borne by larger countries with higher levels of savings.

Keywords: financial crises; international capital linkages; input-output analysis (search for similar items in EconPapers)
JEL-codes: F65 G01 G15 (search for similar items in EconPapers)
Pages: 35 p.
Date: 2016
New Economics Papers: this item is included in nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.diw.de/documents/publikationen/73/diw_01.c.527683.de/dp1554.pdf (application/pdf)

Related works:
Journal Article: The integration of international financial markets: an attempt to quantify contagion in an input–output-type analysis (2019) Downloads
Journal Article: The integration of international financial markets: an attempt to quantify contagion in an input–output-type analysis (2019) Downloads
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:diw:diwwpp:dp1554

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().

 
Page updated 2020-09-15
Handle: RePEc:diw:diwwpp:dp1554