The Global Banking Network: What is Behind the Increasing Regionalization Trend?

60 Pages Posted: 15 Nov 2018

See all articles by Eugenio Cerutti

Eugenio Cerutti

International Monetary Fund (IMF); Johns Hopkins University

Haonan Zhou

Princeton University - Department of Economics

Date Written: March 2018

Abstract

This paper analyses the nature of the increasing regionalization process in global banking. Despite the large decline in aggregate cross-border banking lending volumes, some parts of the global banking network are currently more interlinked regionally than before the Global Financial Crisis. After developing a simple theoretical model capturing banks' internationalization decisions, our estimation shows that this regionalization trend is present even after controlling for traditional gravitational variables (e.g. distance, language, legal system, etc.), especially among lenders in EMs and non-core banking systems, such as Australia, Canada, Hong Kong, and Singapore. Moreover, this regionalization trend was present before the GFC, but it has increased since then, and it seems to be associated with regulatory variables and the opportunities created by the retrenchment of several European lenders.

Keywords: Cross-border banking, International financial markets, Econometric models, Globalization, Cross country analysis, Cross-border Lending, Banking Network, Financial Regionalization, 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: What is Behind the Increasing Regionalization Trend? (March 2018). IMF Working Paper No. 18/46, Available at SSRN: https://ssrn.com/abstract=3285228

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
21
Abstract Views
146
PlumX Metrics