Friday, September 30 – 3:00 p.m.
Center for Social Complexity Suite
Third Floor, Research Hall

Title: A Network Analysis of Global Banking: 1978-2010 (co-authored with Javier Reyes)

Camelia Minoiu, PhD
IMF Institute
International Monetary Fund

Abstract: We explore the properties of the global banking network using cross-border banking data for 184 countries over 1978–2010. We document an unstable global banking network with empirical distributions of network indicators that change markedly over time, especially for borrowers. Structural breaks in network indicators identify two waves of global capital flows leading up respectively to the 1997–98 East Asian crisis and the 2008–09 global financial crisis. While network density tends to expand and contract with the global cycle of capital flows, network indicators provide incremental information compared to aggregate flows. For example, network density before the global financial crisis was comparable to earlier peaks despite the historically unique build-up in aggregate flows. We also find that country-level financial interconnectedness falls in the aftermath of systemic banking crises and sovereign default episodes. The aftermath of the global financial crisis stands out as an unusual perturbation to the global banking network.