Regional Financial Interlinkages and Financial Contagion within Europe

44 Pages Posted: 11 Mar 2009

See all articles by Zsofia Arvai

Zsofia Arvai

International Monetary Fund (IMF)

Karl Driessen

International Monetary Fund (IMF)

Inci Otker-Robe

International Monetary Fund (IMF) - Monetary and Capital Markets Department; World Bank

Date Written: Janurary 2009

Abstract

This paper focuses on financial interlinkages within Europe and potential contagion channeled through these interlinkages. It discusses the increased role of external financing as a source of funding for credit growth; analyzes potential channels of contagion through financial linkages; and assesses the magnitude of cross-border exposures between emerging and western European countries. Based on the stylized facts on these exposures, the paper provides simple indices of exposure to regional contagion that could help identify the likely pressure points and capture potential spillover effects and propagation channels of a regional shock originating from a given country.

Keywords: Spillovers, Europe, Credit expansion, Emerging markets, Economic integration, Regional shocks, Financial sector, Financial risk, Private sector, Financial stability

Suggested Citation

Arvai, Zsofia and Driessen, Karl and Ötker-Robe, İnci, Regional Financial Interlinkages and Financial Contagion within Europe (Janurary 2009). IMF Working Paper No. 09/6, Available at SSRN: https://ssrn.com/abstract=1356462

Zsofia Arvai (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Karl Driessen

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

İnci Ötker-Robe

International Monetary Fund (IMF) - Monetary and Capital Markets Department ( email )

United States
202 623-7000 (Phone)
202 623-4661 (Fax)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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