The Global Banking Network in the Aftermath of the Crisis: Is There Evidence of De-globalization?

Eugenio Cerutti and Haonan Zhou

No 2017/232, IMF Working Papers from International Monetary Fund

Abstract: Post-crisis dynamics show a shrinkage in the overall amount of crossborder bank lending, which has been interpreted in the literature as a retreat in financial globalization. In this paper, we argue that aggregate figures are not sufficient to support such a claim in terms of the overall structure of the global banking network. Based on a systematic approach to measuring, mapping and analyzing financial interconnectedness among countries using network theory, we show that, despite the decline in aggregate lending volumes, the structure of the network has developed increased connections in some dimensions. Some parts of the network are currently more interlinked regionally than before the crisis, and less dependent on major global lenders. In this context, at a more disaggregate level, we document the characteristics of the increasing regionalization of lending flows, the different evolution of linkages through bank affiliates and direct cross-border claims, as well as the shift in the importance of key borrower and lender nodes. These changes in the banking network have important insights in terms of policy implications since they indicate that the global banking network has evolved, but it has not undergone a generalized retrenchment in financial linkages.

Keywords: WP; exchange rate; emerging market; regression analysis; Cross-border Lending; Banking Network; Financial Interconnectedness; CBS data; borrower country; Katz-Bonacich centrality; bank size; lender-borrower pair; credit-borrower dependence; flow process; borrower capital account openness; lender bank assets; Cross-border banking; Offshore financial centers; International banking; Foreign banks; Financial statistics; Global; Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 45
Date: 2017-11-07
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Citations: View citations in EconPapers (35)

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