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Shockwaves across borders: Did the 2023 banking crisis reshape global banking sector linkages?

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  • Huang, Chun-Sung
  • Charteris, Ailie

Abstract

We investigate the impact of the 2023 banking crisis, the most significant banking system turmoil since the Global Financial Crisis (GFC), on co-movement between the United States (U.S.) and global banking sectors. Using wavelet coherence and beta regressions, we find strong contagion during the crisis. The crisis primarily impacted co-movement through a change in U.S. monetary policy and heightened risk perceptions. Post-crisis, interdependence weakened, although contagion persisted for some countries. Our results highlight the success of post-GFC reforms and swift government and central bank interventions in containing systemic risk during the crisis and suggest increased post-crisis diversification opportunities for investors.

Suggested Citation

  • Huang, Chun-Sung & Charteris, Ailie, 2025. "Shockwaves across borders: Did the 2023 banking crisis reshape global banking sector linkages?," Finance Research Letters, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:finlet:v:82:y:2025:i:c:s154461232500830x
    DOI: 10.1016/j.frl.2025.107571
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    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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