IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v96y2026ics0927538x25000952.html

Global financial cycle: The temporal dimension and cross-sectional dimension

Author

Listed:
  • Fang, Yi
  • Tang, Qirui

Abstract

The cross-sectional dimension of the financial cycle is interconnection risk, and the dynamic evolution of interconnection risk forms the basis for the temporal dimension of the financial cycle. We utilize long-term historical data of 17 developed economies from 1871 to 2020 to study the relationship between the temporal and cross-sectional dimensions of the global financial cycle. The results reveal a significant inverse relationship between the cross-sectional and temporal dimensions of the global financial cycle, which from the perspective of the global financial cycle, illustrates the theory of financial instability. Moreover, from a temporal perspective, there is a high degree of synchronicity among the financial cycles of different countries, with the financial cycle of the United States leading that of the majority of countries. From a cross-sectional perspective, the formation of global credit cycles, housing market cycles, and stock market cycles are driven by spillover risks. Among them, the United States dominates the global financial cycle by spilling over risks to other countries, and this impact has also gradually strengthened over time.

Suggested Citation

  • Fang, Yi & Tang, Qirui, 2026. "Global financial cycle: The temporal dimension and cross-sectional dimension," Pacific-Basin Finance Journal, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:pacfin:v:96:y:2026:i:c:s0927538x25000952
    DOI: 10.1016/j.pacfin.2025.102758
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X25000952
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2025.102758?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:96:y:2026:i:c:s0927538x25000952. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.