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Banking flows and financial crisis -- financial interconnectedness and basel III effects

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  • Ghosh, , Swati R.
  • Sugawara, Naotaka
  • Zalduendo, Juan
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    Abstract

    This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5769.

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    Date of creation: 01 Aug 2011
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    Handle: RePEc:wbk:wbrwps:5769

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    Keywords: Debt Markets; Banks&Banking Reform; Emerging Markets; Access to Finance; Economic Theory&Research;

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    17. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1993. "“Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," MPRA Paper 7125, University Library of Munich, Germany.
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    20. Patrick Slovik & Boris Cournède, 2011. "Macroeconomic Impact of Basel III," OECD Economics Department Working Papers 844, OECD Publishing.
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