The two faces of cross-border banking flows: An investigation into the links between global risk, arms-length funding, and internal capital markets

Dennis Reinhardt, Steven Riddiough, 7 May 2014



Following the collapse of Lehman Brothers in September 2008, global risk spiked and the world witnessed a collapse in cross-border funding between banks. On closer inspection, however, not all countries’ banking systems experienced a withdrawal of cross-border finance. In fact, a number actually enjoyed an inflow of funding from banks overseas (Figure 1).

Topics: Financial markets, International finance
Tags: banking, cross-border banking, Cross-border lending, financial stability, interbank lending, Wholesale funding

How important was the worldwide use of wholesale funds for the international transmission of the US subprime crisis?

Claudio Raddatz, 15 March 2010



The global scale of the financial crisis begs the question: How could a shock to a seemingly small segment of the US financial market spread so far, so quickly? Although trade links with the US have undoubtedly played a role (Levchenko et al. 2009), the timing of some of the events strongly suggests that the first route of transmission was through the web of international finance.

Topics: Global crisis
Tags: financial regulation, global crisis, Wholesale funding

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