The Global Banking Network: What is Behind the Increasing Regionalization Trend?
IMF Working Papers, March 9, 2018
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- The Global Banking Network: What is Behind the Increasing Regionalization Trend?
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Bibliographic details
- Authors: Eugenio M Cerutti, Haonan Zhou
- Published: March 9, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484345177.001
Main findings
- 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.
- The regionalization trend is present even after controlling for traditional gravitational variables (e.g. distance, language, legal system, etc.).
- The regionalization trend was present before the GFC, but it has increased since then.
- The trend is especially pronounced among lenders in EMs and non-core banking systems, such as Australia, Canada, Hong Kong, and Singapore.
- The regionalization trend seems to be associated with regulatory variables and the opportunities created by the retrenchment of several European lenders.
Methodology and analytic approach
- Developed a simple theoretical model capturing banks' internationalization decisions.
- Empirical estimation accounts for traditional gravitational variables (e.g. distance, language, legal system, etc.) to isolate regionalization effects.
Drivers and associations
- Decline in aggregate cross-border banking lending volumes coincides with increased regional interlinkages in parts of the network.
- Regulatory variables are associated with the increase in regionalization.
- Retrenchment of several European lenders appears to have created opportunities that contributed to regionalization.
Scope and emphasis
- Emphasis on lenders in EMs and non-core banking systems (explicit examples: Australia, Canada, Hong Kong, Singapore).
- Temporal dimension: regionalization present before the GFC and intensified after the GFC.
Source: Eugenio M Cerutti and Haonan Zhou, "The Global Banking Network: What is Behind the Increasing Regionalization Trend?", IMF Working Papers, March 9, 2018.
Content in this bundle
- wp1846 — "13. Peripheral Lenders: Interaction with Global Banks’ Retrenchment"