Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300482 
Year of Publication: 
2024
Series/Report no.: 
Working Papers No. 24-4
Publisher: 
Federal Reserve Bank of Boston, Boston, MA
Abstract: 
We develop a structural model of the global banking network and analyze its role in facilitating risk sharing and amplifying shocks across countries and over time. Using bilateral international lending data, we uncover significant heterogeneity in the willingness and capacity of banks to provide cross-border interbank and corporate loans. This heterogeneity explains variation in risk sharing and amplification across countries. Moreover, we show that cross-border loan supply has become less elastic over time, resulting in a decline in risk sharing. While shock amplification has also declined on average, some countries may experience greater amplification in response to foreign funding shocks.
Subjects: 
global banking network
risk sharing
shock propagation
capital flows
JEL: 
F34
G21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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