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 07 May 2014

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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).

Figure 1 Cross-border bank-to-bank flows following the collapse of Lehman Brothers

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Topics:  Financial markets International finance

Tags:  financial stability, banking, Wholesale funding, interbank lending, Cross-border lending, cross-border banking

Financial protectionism

Andrew K Rose, Tomasz Wieladek 29 May 2011

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The “Great Recession” which engulfed the world in 2008-09 is frequently compared to the Great Depression of the early 1930s. Many economists blame trade protectionism for deepening, spreading, and/or lengthening the Great Depression, especially given the dramatic decline in trade during the Great Recession (Eichengreen and O’Rourke 2010).

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Topics:  Global crisis International finance International trade

Tags:  financial regulation, global crisis, protectionism, Cross-border lending

Running for the exit: International banks and crisis transmission

Ralph De Haas, Neeltje van Horen 13 February 2011

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In the wake of the 2007-2009 economic crisis, the virtues and vices of financial globalisation are being re-evaluated. Financial linkages between countries, in particular in the form of bank lending, have been singled out as a key channel of international crisis transmission. The IMF and the G20 have identified the volatility of cross-border capital flows as a priority related to the reform of the global financial system.

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Topics:  Global crisis International finance

Tags:  capital markets, financial regulation, Cross-border lending