International Financial Integration in the Aftermath of the Global Financial Crisis

By Philip R. Lane, Gian M Milesi-Ferretti

May 10, 2017

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Philip R. Lane, and Gian M Milesi-Ferretti. International Financial Integration in the Aftermath of the Global Financial Crisis, (USA: International Monetary Fund, 2017) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper documents the evolution of international financial integration since the global financial crisis using an updated dataset on external assets and liabilities, covering over 210 economies for the period 1970-2015. It finds that the growth in cross-border positions in relation to world GDP has come to a halt. This reflects much weaker capital flows to and from advanced economies, with diminished cross-border banking activity, and an increase in the weight of emerging economies in global GDP, as these economies have lower external assets and liabilities than advanced economies. Cross-border FDI positions have continued to expand, unlike positions in portfolio instruments and other investment. This expansion reflects primarily positions vis-à-vis financial centers, suggesting that the complexity of the corporate structure of large multinational corporations is playing an important role. The paper also explores the cross-country drivers of foreign ownership of domestic debt securities, highlighting in particular the role of the euro debt crisis in explaining its evolution.

Subject: Balance of payments, Financial crises, Financial institutions, Foreign direct investment, Global financial crisis of 2008-2009, Government securities, Securities

Keywords: Aggregate portfolio debt category, Central bank, Country group, Debt securities, Equity liability, Financial crisis, Financial globalization, Foreign direct investment, Global, Global financial crisis of 2008-2009, Government securities, International financial integration, Portfolio debt claim, Portfolio debt liability, Portfolio debt position, Portfolio debt securities, Portfolio equity liability, Portfolio equity positions, Portfolio holding, Securities, World GDP, World GDP share, WP

Publication Details

Pages:

53
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/115
Stock No:

WPIEA2017115
ISBN:

9781484300336
ISSN:

1018-5941

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