International Financial Integration in the Aftermath of the Global Financial Crisis

Philip Lane and Gian Maria Milesi-Ferretti ()

No 2017/115, IMF Working Papers from International Monetary Fund

Abstract: This paper documents the evolution of international financial integration since the global financial crisis using an updated dataset on external assets and liabilities, covering over 210 economies for the period 1970-2015. It finds that the growth in cross-border positions in relation to world GDP has come to a halt. This reflects much weaker capital flows to and from advanced economies, with diminished cross-border banking activity, and an increase in the weight of emerging economies in global GDP, as these economies have lower external assets and liabilities than advanced economies. Cross-border FDI positions have continued to expand, unlike positions in portfolio instruments and other investment. This expansion reflects primarily positions vis-à-vis financial centers, suggesting that the complexity of the corporate structure of large multinational corporations is playing an important role. The paper also explores the cross-country drivers of foreign ownership of domestic debt securities, highlighting in particular the role of the euro debt crisis in explaining its evolution.

Keywords: WP; debt securities; financial crisis; aggregate portfolio debt category; central bank; country group; International financial integration; financial globalization; portfolio debt liability; portfolio holding; equity liability; world GDP share; portfolio debt position; portfolio debt securities; portfolio equity liability; portfolio equity positions; World GDP; portfolio debt claim; Securities; Government securities; Foreign direct investment; Global financial crisis of 2008-2009; Global (search for similar items in EconPapers)
Pages: 53
Date: 2017-05-10
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Citations: View citations in EconPapers (160)

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