The Global Banking Network: What is Behind the Increasing Regionalization Trend?

March 9, 2018

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Eugenio M Cerutti, and Haonan Zhou. The Global Banking Network: What is Behind the Increasing Regionalization Trend?, (USA: International Monetary Fund, 2018) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper analyses the nature of the increasing regionalization process in global banking. Despite the large decline in aggregate cross-border banking lending volumes, some parts of the global banking network are currently more interlinked regionally than before the Global Financial Crisis. After developing a simple theoretical model capturing banks' internationalization decisions, our estimation shows that this regionalization trend is present even after controlling for traditional gravitational variables (e.g. distance, language, legal system, etc.), especially among lenders in EMs and non-core banking systems, such as Australia, Canada, Hong Kong, and Singapore. Moreover, this regionalization trend was present before the GFC, but it has increased since then, and it seems to be associated with regulatory variables and the opportunities created by the retrenchment of several European lenders.

Subject: Bank credit, Banking, Cross-border banking, Financial crises, Financial institutions, Financial services, Foreign banks, Global financial crisis of 2008-2009, Money

Keywords: Asia and Pacific, Bank credit, Banking flow, Banking Network, Borrower bank concentration, Borrower country, Central Asia, Cross-border banking, Cross-border Lending, Dependent variable, Europe, Financial Regionalization, Foreign banks, Global, Global financial crisis of 2008-2009, Internationalization process, Lender - borrower, Lender bank concentration, Lender-borrower linkage, Lender-borrower regulation distance, Market development, Optimization problem, Peripheral lender, Western Hemisphere, WP

Publication Details

Pages:

59
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/046
Stock No:

WPIEA2018046
ISBN:

9781484345177
ISSN:

1018-5941

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