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

46 Pages Posted: 1 Dec 2017

See all articles by Eugenio Cerutti

Eugenio Cerutti

International Monetary Fund (IMF); Johns Hopkins University

Haonan Zhou

Princeton University - Department of Economics

Date Written: November 2017

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 ofthe 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: International financial markets, Cross-border Lending, Banking Network, Financial Interconnectedness, International Lending and Debt Problems, Financial Aspects of Economic Integration, Other

JEL Classification: F34, F36, F39, G15

Suggested Citation

Cerutti, Eugenio and Zhou, Haonan, The Global Banking Network in the Aftermath of the Crisis: Is There Evidence of De-Globalization? (November 2017). IMF Working Paper No. 17/232, Available at SSRN: https://ssrn.com/abstract=3079559

Eugenio Cerutti (Contact Author)

International Monetary Fund (IMF) ( email )

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

Johns Hopkins University ( email )

Baltimore, MD 21218
United States

Haonan Zhou

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

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