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A network analysis of global banking: 1978–2010

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  • Minoiu, Camelia
  • Reyes, Javier A.

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 pro-cyclical, 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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Stability.

Volume (Year): 9 (2013)
Issue (Month): 2 ()
Pages: 168-184

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Handle: RePEc:eee:finsta:v:9:y:2013:i:2:p:168-184

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Web page: http://www.elsevier.com/locate/jfstabil

Related research

Keywords: Cross-border banking; Network analysis; Financial interconnectedness; Banking crises; Sovereign debt crises;

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References

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Citations

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Cited by:
  1. Rodrigo César de Castro Miranda & Benjamin Miranda Tabak, 2013. "Contagion Risk within Firm-Bank Bivariate Networks," Working Papers Series 322, Central Bank of Brazil, Research Department.
  2. Peltonen, Tuomas A. & Scheicher, Martin & Vuillemey, Guillaume, 2013. "The network structure of the CDS market and its determinants," Working Paper Series 1583, European Central Bank.
  3. Camelia Minoiu & Chanhyun Kang & V.S. Subrahmanian & Anamaria Berea, 2013. "Does Financial Connectedness Predict Crises?," IMF Working Papers 13/267, International Monetary Fund.
  4. Lena Tonzer, 2013. "Cross-Border Interbank Networks, Banking Risk and Contagion," FIW Working Paper series 129, FIW.
  5. Martinez-Jaramillo, Serafin & Alexandrova-Kabadjova, Biliana & Bravo-Benitez, Bernardo & Solórzano-Margain, Juan Pablo, 2014. "An empirical study of the Mexican banking system’s network and its implications for systemic risk," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 242-265.
  6. Matteo Smerlak & Brady Stoll & Agam Gupta & James S. Magdanz, 2014. "Mapping systemic risk: critical degree and failures distribution in financial networks," Papers 1402.4783, arXiv.org, revised Mar 2014.
  7. Paolo Giudici & Alessandro Spelta, 2013. "Graphical network models for international financial flows," DEM Working Papers Series 052, University of Pavia, Department of Economics and Management.

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