Fascinating chart in the BIS Quarterly Review that helps to explain how any banking crisis can go viral, infecting the entire globe:

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click for bigger graphic

Chart courtesy of BIS

Excerpt:

“This article outlines a broad framework for assessing system-wide funding risks and analysing banks’ role in the transmission of shocks across countries. It highlights the need to complement essential data on banks’ consolidated balance sheets with information that provides a geographically disaggregated picture of those balance sheets. It then discusses how far the BIS international banking statistics, which have several though not all of the desired statistical properties, can go in providing measures of system-wide funding risk.”

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Source:
Bank structure, funding risk and the transmission of shocks across countries: concepts and measurement
Ingo Fender, Patrick McGuire
BIS Quarterly Review, September 2010
http://www.bis.org/publ/qtrpdf/r_qt1009.htm

Category: Bailouts, Credit

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “International Banking System Linkages”

  1. NoKidding says:

    The Big Picture is becoming impossible to browse with Internet Explorer from where I sit.
    Lots of reloads and cursor repositionings.

  2. louis says:

    Same on Firefox, your on life support.

  3. Gator81 says:

    Mr. Ritholtz,
    Your blog software is getting very, very busy. Using the latest Firefox browser, it’s still a bit like hitting the spin cycle whenever a link is clicked. Still worth it, of course, but… geez…

    About the BIS graphics: I skimmed the linked document, looking for references to their analysis processes to which I assumed such a rich data set would be subjected. Didn’t find anything. Seems to me, for a network system in which each link has a measured flow and an estimated capacity, a classic operations research type of transportation analysis could be useful in predicting how a change in flow on one link would affect flows on the others. Not the causes, mind you, but the effects afterward. I would think this analysis is being done somewhere by somebody, and it would help to highlight projected increases or decreases in financial activity in those smaller financial centers (“FC” in the diagrams), which in turn could be valuable information to investors considering foreign markets. Is this something the quants at FusionIQ do? Just curious.

  4. Thor says:

    Gator – I’m experiencing the same problem!

    BR, your site is becoming increasingly difficult to load. Don’t know if it’s all the new adware, or if the newer firefox updates are causing it to bog down. I can’t comment in the religion thread at all. . . .

  5. constantnormal says:

    Gee, lookit the huge pipeline of money running between the US and the Caribbean tax havens … a.k.a. “Financial Centers” …

  6. EorrFU says:

    Here I am lamenting the fact that Brad Setser isn’t here to tell everyone about how the massive flow between the UK and US is dominated by the Chinese and the fact that when china trades in US denominated assets they go through the UK in the early morning and not through the US which is still asleep. The BIS stats are useless in describing financial flows.