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


  • Hoggarth, Glenn

    (Bank of England)

  • Mahadeva, Lavan

    (Bank of England)

  • Martin, Jeremy

    (Bank of England)


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

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    References listed on IDEAS

    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.
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    Cited by:

    1. 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.
    2. Shugo Yamamoto, 2015. "Banking Network Amplification Effects on Cross-Border Bank Flows," Discussion Papers 1533, Graduate School of Economics, Kobe University.
    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. repec:prg:jnlcfu:v:2017:y:2017:i:4:id:504:p:41-56 is not listed on IDEAS

    More about this item


    International capital flows;

    JEL classification:

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


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