No. 1485 - Banking complexity in the global economy
The paper analyses the role of global banking networks in financial flows between countries. Specifically, it examines how cross-border loans do not always travel directly between lenders and borrowers but often pass through financial centers and indirect paths, such as subsidiaries of banking groups. The goal is to understand how this complex network influences the transmission of financial sanctions and the effectiveness of international banking integration policies.
In the case of financial sanctions, credit flows driven by actual demand and supply factors may move in the opposite direction to the movements observed in bilateral data, which also include loans that have merely transited through countries via financial intermediaries. More complex banking networks, involving a larger number of intermediaries across several countries, provide alternative pathways for financial flows during crises but reduce the diversification of funding sources.
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13 March 2025
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