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Financial Stability Paper No 8: Understanding International Bank Capital Flows during the Recent Financial Crisis

Author

Listed:
  • Hoggarth, Glenn

    (Bank of England)

  • Mahadeva, Lavan

    (Bank of England)

  • Martin, Jeremy

    (Bank of England)

Abstract

Cross-country bank lending mushroomed over the past decade. This helped to spread risks but also meant that international banks were more vulnerable than previously to shocks from abroad including from each other. Following the outbreak of the US sub-prime crisis, and especially after the collapse of Lehman Brothers, cross-border bank flows reversed dramatically. This paper is aimed at better understanding how the recent crisis propagated through the international banking system. It describes the pattern of deleveraging by international banks in reaction to their funding and capital pressures, the international spillovers and the vulnerability of the UK banking system to shocks from abroad given its global role.

Suggested Citation

  • Hoggarth, Glenn & Mahadeva, Lavan & Martin, Jeremy, 2010. "Financial Stability Paper No 8: Understanding International Bank Capital Flows during the Recent Financial Crisis," Bank of England Financial Stability Papers 8, Bank of England.
  • Handle: RePEc:boe:finsta:0008
    Note: Bank Capital Flow; lending; deleveraging
    as

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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/financial-stability-paper/2010/understanding-international-bank-capital-flows-during-the-recent-financial-crisis
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    References listed on IDEAS

    as
    1. Marco A. Espinosa-Vega & Juan Solé, 2011. "Cross-border financial surveillance: a network perspective," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 3(3), pages 182-205, August.
    2. Gai, Prasanna & Kapadia, Sujit, 2010. "Contagion in financial networks," Bank of England working papers 383, Bank of England.
    3. Patrick McGuire & Goetz von Peter, 2009. "The US dollar shortage in global banking and the international policy response," BIS Working Papers 291, Bank for International Settlements.
    4. Stijn Claessens & Luc Laeven & Deniz O Igan & Giovanni Dell'Ariccia, 2010. "Lessons and Policy Implications from the Global Financial Crisis," IMF Working Papers 10/44, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. repec:eee:jimfin:v:83:y:2018:i:c:p:23-43 is not listed on IDEAS
    2. Hoggarth, Glenn & Hooley, John & Korniyenko, Yevgeniya, 2013. "Financial Stability Paper No 22: Which way do foreign branches sway? Evidence from the recent UK domestic credit cycle," Bank of England Financial Stability Papers 22, Bank of England.
    3. Speller, William & Thwaites, Gregory & Wright, Michelle, 2011. "Financial Stability Paper No 12: The Future of International Capital Flows," Bank of England Financial Stability Papers 12, Bank of England.
    4. Agénor, Pierre-Richard & Alper, Koray & Pereira da Silva, Luiz, 2018. "External shocks, financial volatility and reserve requirements in an open economy," Journal of International Money and Finance, Elsevier, vol. 83(C), pages 23-43.
    5. Amir Akbari & Francesca Carrieri & Aytek Malkhozov, 2017. "Reversals in Global Market Integration and Funding Liquidity," International Finance Discussion Papers 1202, Board of Governors of the Federal Reserve System (U.S.).
    6. Shugo Yamamoto, 2015. "Banking Network Amplification Effects on Cross-Border Bank Flows," Discussion Papers 1533, Graduate School of Economics, Kobe University.
    7. repec:prg:jnlcfu:v:2017:y:2017:i:4:id:504:p:41-56 is not listed on IDEAS

    More about this item

    Keywords

    International capital flows;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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