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

_IMF Working Papers, March 9, 2018_

## Source details

**Canonical URL:** [The Global Banking Network: What is Behind the Increasing Regionalization Trend?](https://www.imf.org/en/publications/wp/issues/2018/03/09/the-global-banking-network-what-is-behind-the-increasing-regionalization-trend-45682)

## Other formats

- [Markdown version](/en/publications/wp/issues/2018/03/09/the-global-banking-network-what-is-behind-the-increasing-regionalization-trend-45682/index.md)
- [Structured JSON version](/en/publications/wp/issues/2018/03/09/the-global-banking-network-what-is-behind-the-increasing-regionalization-trend-45682/index.json)
- [Bundle manifest](/en/publications/wp/issues/2018/03/09/the-global-banking-network-what-is-behind-the-increasing-regionalization-trend-45682/bundle-manifest.json)

## 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"**
  - [wp1846 — "13. Peripheral Lenders: Interaction with Global Banks’ Retrenchment" (Markdown version)](/-/media/files/publications/wp/2018/wp1846.pdf.md){rel="alternate" type="text/markdown"}
  - [wp1846 — "13. Peripheral Lenders: Interaction with Global Banks’ Retrenchment" (PDF)](/-/media/files/publications/wp/2018/wp1846.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2018/03/09/the-global-banking-network-what-is-behind-the-increasing-regionalization-trend-45682_