Post-crisis dynamics show a shrinkage in the overall amount of crossborder bank lending,
which has been interpreted in the literature as a retreat in financial globalization. In this
paper, we argue that aggregate figures are not sufficient to support such a claim in terms of
the overall structure of the global banking network. Based on a systematic approach to
measuring, mapping and analyzing financial interconnectedness among countries using
network theory, we show that, despite the decline in aggregate lending volumes, the structure
of the network has developed increased connections in some dimensions. Some parts of the
network are currently more interlinked regionally than before the crisis, and less dependent
on major global lenders. In this context, at a more disaggregate level, we document the
characteristics of the increasing regionalization of lending flows, the different evolution of
linkages through bank affiliates and direct cross-border claims, as well as the shift in the
importance of key borrower and lender nodes. These changes in the banking network have
important insights in terms of policy implications since they indicate that the global banking
network has evolved, but it has not undergone a generalized retrenchment in financial
. Regionalization of global banking
5. Cross-Dataset Comparison: Correlation of Network Measures
1. Aggregate Global Cross-Border Claims
2. Illustration of LBS, CBS and adjusted CBS measures using networks
3. Network Visualization
4. Evolution of Degree, Strength and Concentration
5. Network Statistics by Lender Groups
6. In-Degree Distribution
7. Mean Katz-BonacichCentrality by Country Groups
8. Mean Authority/Hub Measure by Country Groups
9. Heatmap: Lender Rank Distribution
10. Heatmap: Regional Key Players Rank Distribution
.5 results in a network multiplier effect of 1/(1-0.5) = 2, suggesting that one-dollar idiosyncratic shock equally spread across all nodes will result in two dollars’ shock to aggregate liquidity in the network.
Heipertz, Ranciere, and Valla (2016) develops an empirical balance-sheet contagion equation, whose first order approximation establishes a proportional relationship between sectoral asset returns and Katz-Bonacichcentrality. Denbee et al (2016) models bank’s liquidity holding as a network game and characterizes its Nash Equilibrium and key risk
evolution of the global banking network. We provide an in-depth discussion of network measure choice based on the structural context of a core-periphery, asymmetric and unbalanced network structure and in the economic context of characterizing banking flows at the country level. We introduce measures of node importance that capture distinct aspects of global banking linkages. In particular, we use recursively defined Katz-Bonacichcentrality (see Katz (1953) and Bonacich (1987) ) and authority/hub measure ( Klienberg, 1999 ) to characterize country importance based on
Mr. Jemma Dridi, Tunc Gursoy, Hector Perez-Saiz, Mounir Bari, and Mario de Zamaróczy
our calibrated model show that input-output sectoral linkages are important to explain the magnitude of the effect of remittances on output across sectors. We first assess the importance of input-output sectoral linkages in the economy by constructing two centrality measures based on the Leontief input-output matrix, the weighted outdegree, and the KatzBonacichcentrality score. A careful analysis of these centrality measures shows that financial intermediation, and also other sectors, such as petroleum and minerals, or retail/wholesale trade, are, on average, more
might possibly share.
If the higher degree is set to 30, the coefficient reaches 0.5952 in Asia, 0.7058 in the Americas and reaches 0.7749 in the EMEA region.
Traditional analysis of centrality in this case is misleading as measures such as betweenness, eigenvector or Katz-Bonacichcentrality do not have consistency and their ranks are distorted by the structure of the network and regional subnetworks.
These core banks are mainly Thai and Indian banks that are however considered systemically important institutions domestically
Hector Perez-Saiz, Mr. Jemma Dridi, Tunc Gursoy, and Mounir Bari
We propose a simple macroeconomic model with input-output sectoral linkages based on Acemoglu et al. (2016) to quantify how changes in aggregate demand due to additional income from household’s remittances propagates through the network of input-output linkages in Sub-Saharan African countries. We first propose two network centrality measures to assess the role of some sectors as key input providers in the economy. Then, we use these measures to quantify the effect of sectoral linkages on sectoral and total output following an increase in remittances inflows. Our empirical results suggest that the effects of remittances on recipient economies increase with the degree of linkages across sectors, which is especially prominent in the case of the financial intermediation sector. Our paper contributes to the emerging macroeconomic literature on the propagation of shocks across sectors and the implications for the whole economy.
This paper computes data-driven correlation networks based on the stock returns of international banks and conducts a comprehensive analysis of their topological properties. We first apply spatial-dependence methods to filter the effects of strong common factors and a thresholding procedure to select the significant bilateral correlations. The analysis of topological characteristics of the resulting correlation networks shows many common features that have been documented in the recent literature but were obtained with private information on banks' exposures, including rich and hierarchical structures, based on but not limited to geographical proximity, small world features, regional homophily, and a core-periphery structure.