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Post-crisis dynamics show a shrinkage in the overall amount of crossborder bank lending, which has been interpreted in the literature as a retreat in financial globalization. In this paper, we argue that aggregate figures are not sufficient to support such a claim in terms of the overall structure of the global banking network. Based on a systematic approach to measuring, mapping and analyzing financial interconnectedness among countries using network theory, we show that, despite the decline in aggregate lending volumes, the structure of the network has developed increased connections in some dimensions. Some parts of the network are currently more interlinked regionally than before the crisis, and less dependent on major global lenders. In this context, at a more disaggregate level, we document the characteristics of the increasing regionalization of lending flows, the different evolution of linkages through bank affiliates and direct cross-border claims, as well as the shift in the importance of key borrower and lender nodes. These changes in the banking network have important insights in terms of policy implications since they indicate that the global banking network has evolved, but it has not undergone a generalized retrenchment in financial linkages.

Banks and Banking --- Statistics --- International Lending and Debt Problems --- Financial Aspects of Economic Integration --- International Finance: Other --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Data Collection and Data Estimation Methodology --- Computer Programs: Other --- Banking --- Econometrics & economic statistics --- Offshore financial centers --- International banking --- Cross-border banking --- Foreign banks --- Financial services --- Financial institutions --- Financial statistics --- Economic and financial statistics --- Banks and banking --- International finance --- Banks and banking, Foreign --- Finance --- United States

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This paper sheds new light on the degree of international fiscal-financial spillovers by investigating the effect of domestic fiscal policies on cross-border bank lending. By estimating the dynamic response of U.S. cross-border bank lending towards the 45 recipient countries to exogenous domestic fiscal shocks (both measured by spending and revenue) between 1990Q1 and 2012Q4, we find that expansionary domestic fiscal shocks lead to a statistically significant increase in cross-border bank lending. The magnitude of the effect is also economically significant: the effect of 1 percent of GDP increase (decrease) in spending (revenue) is comparable to an exogenous decline in the federal funds rate. We also find that fiscal shocks tend to have larger effects during periods of recessions than expansions in the source country, and that the adverse effect of a fiscal consolidation is larger than the positive effect of the same size of a fiscal expansion. In contrast, we do not find systematic and statistically significant differences in the spillover effects across recipient countries depending on their exchange rate regime, although capital controls seem to play some moderating role. The extension of the analysis to a panel of 16 small open economies confirms the finding from the U.S. economy.

Fiscal policy. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Foreign Exchange --- Fiscal Policy --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- International Policy Coordination and Transmission --- International Lending and Debt Problems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- National Government Expenditures and Related Policies: General --- Externalities --- Banking --- Monetary economics --- Public finance & taxation --- Currency --- Foreign exchange --- Cross-border banking --- Bank credit --- Fiscal stimulus --- Expenditure --- Spillovers --- Financial services --- Money --- Fiscal policy --- Financial sector policy and analysis --- Exchange rate arrangements --- International finance --- Credit --- Expenditures, Public --- United States

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Using data collected from pan-African banks’ (PABs), balance sheets and other sources (Orbis, Fitch), this study identifies some key patterns of cross-border investment in bank subsidiaries by key banking groups in sub-Saharan Africa (SSA) and discusses some of the determinants of this investment. Using a gravity model relating the annual value of a banking group’s investment in the net equity of its subsidiaries to a set of explanatory variables, the analysis finds that cross-border banking is in part driven by a search for yield, diversification, and expansion for strategic reasons.

Banks and banking, International. --- International banking --- Offshore banking (Finance) --- Transnational banking --- Financial institutions, International --- International finance --- Banks and Banking --- Foreign Exchange --- Inflation --- Investments: Stocks --- Econometrics --- Current Account Adjustment --- Short-term Capital Movements --- International Monetary Arrangements and Institutions --- International Lending and Debt Problems --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Price Level --- Deflation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Econometric Modeling: General --- Banking --- Currency --- Foreign exchange --- Macroeconomics --- Investment & securities --- Econometrics & economic statistics --- Exchange rates --- Cross-border banking --- Stocks --- Financial services --- Prices --- Financial institutions --- Gravity models --- Econometric analysis --- Banks and banking --- Econometric models --- South Africa

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We analyze the joint impact of macroprudential and capital control measures on cross-border banking flows, while controlling for multidimensional aspects in lender-and-borrower-relationships (e.g., distance, cultural proximity, microprudential regulations). We uncover interesting spillover effects from both types of measures when applied either by lender or borrowing countries, with many of them most likely associated with circumvention or arbitrage incentives. While lender countries’ macroprudential policies reduce direct cross-border banking outflows, they are associated with larger outflows through local affiliates. Direct cross-border inflows are higher in borrower countries with more usage of macroprudential policies, and are linked to circumvention motives. In the case of capital controls, most spillovers seem to be present through local affiliates. We do not find evidence to support the idea that additional capital inflow controls could interact with macro-prudential policies to mitigate cross-border spillovers.

Banks and Banking --- Exports and Imports --- Macroeconomics --- Money and Monetary Policy --- Financial Markets and the Macroeconomy --- International Lending and Debt Problems --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- International Investment --- Long-term Capital Movements --- International Policy Coordination and Transmission --- International Financial Markets --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banking --- International economics --- Monetary economics --- Macroprudential policy instruments --- Cross-border banking --- Macroprudential policy --- Capital controls --- Financial sector policy and analysis --- Financial services --- Balance of payments --- Bank credit --- Money --- Economic policy --- International finance --- Banks and banking --- Capital movements --- Credit --- United States

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While global uncertainty—measured by the VIX—has proven to be a robust global “push” factor of international capital flows, there has been no systematic study assessing the role of country-specific uncertainty as a key (pull and push) factor of international capital flows. This paper tries to fill this gap in the literature by examining the effects of country-specific uncertainty shocks on cross-border banking flows using the confidential Bank for International Settlements Locational Banking Statistics data. The dyadic structure of this data allows to disentangle supply and demand factors and to better identify the effect of uncertainty shocks on cross-border banking flows. The results of this analysis suggest that: (i) uncertainty is both a push and pull factor that robustly predicts a decrease in both outflows (retrenchment) and inflows (stops); (ii) global banks rebalance their lending towards safer foreign borrowers from local borrowers when facing higher uncertainty; (iii) this rebalancing occurs only towards advanced economies (flight to quality), but not emerging market economies.

Banks and banking. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Banks and Banking --- Finance: General --- Money and Monetary Policy --- Exports and Imports --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- International Policy Coordination and Transmission --- International Lending and Debt Problems --- General Financial Markets: General (includes Measurement and Data) --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary economics --- International economics --- Cross-border banking --- Stock markets --- Bank credit --- Emerging and frontier financial markets --- Financial services --- Financial markets --- Capital flows --- Balance of payments --- International finance --- Banks and banking --- Stock exchanges --- Credit --- Financial services industry --- Capital movements --- United States