A Network Analysis of Global Banking: 1978-2010

43 Pages Posted: 3 Aug 2011 Last revised: 27 Feb 2013

See all articles by Camelia Minoiu

Camelia Minoiu

Federal Reserve Board

Javier A. Reyes

University of Arkansas - Sam M. Walton College of Business

Date Written: February 26, 2013

Abstract

We analyze the global banking network using data on cross-border banking flows for 184 countries during 1978–2010. We find that the density of the global banking network defined by these flows is procyclical, expanding and contracting with the global cycle of capital flows. We also find that country connectedness in the network tends to rise before banking and debt crises and to fall in their aftermath. Despite a historically unique build-up in aggregate flows prior to the global financial crisis, network density in 2007 was comparable to earlier peaks. This suggests that factors other than connectedness, such as the location of the initial shock to the core of the network, have contributed to the severity of the crisis. The global financial crisis stands out as an unusually large perturbation to the global banking network, with indicators of network density in 2008 reaching all-time lows.

Keywords: cross-border banking, network analysis, financial interconnectedness, financial crises

JEL Classification: F21, F36, F49, G15, G19

Suggested Citation

Minoiu, Camelia and Reyes, Javier A., A Network Analysis of Global Banking: 1978-2010 (February 26, 2013). Journal of Financial Stability, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1903966 or http://dx.doi.org/10.2139/ssrn.1903966

Camelia Minoiu (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Javier A. Reyes

University of Arkansas - Sam M. Walton College of Business ( email )

2 East Center Street
University of Arkansas
Fayetteville, AR 72701
United States
479-575-6079 (Phone)

HOME PAGE: http://economics.uark.edu/directory.php?id=reyes

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