The Global Banking Network: What is Behind the Increasing Regionalization Trend?

The global financial crisis was characterized by heightened financial risk in the USA, which spread to the rest of the world, including emerging economies. This paper constructs a core–periphery model with a global banking network and financial frictions. Due to a common-lender effect, when global banks lend to an emerging economy, heightened financial risk in the center depresses cross-border lending to the emerging economy, reducing real activities and exacerbating monetary policy trade-offs. As financial markets become more integrated, exchange rate flexibility becomes less welfare enhancing and active capital account policy becomes more welfare enhancing.

A Network Analysis of Global Banking: 1978-2010

Research background: Recent financial crisis of 2007?2008 has influenced global banking system and led to reduction of cross-border bank lending in the EU and worldwide. Global banking network has been analysed extensively in prior or post-crisis periods, but the literature on regionalization is scarce, especially with regard to the banking sector in the EU. Moreover, in previous empirical research evaluation of banking sector regionalization using network analysis methodology has not been yet applied.
 Purpose of the article: The aim of the article is to map the EU banking network and to assess its regionalization during post-crisis period.
 Methods: the paper employs comparative literature analysis and synthesis; BIS bilateral interbank cross-border claim yearly flows matrix data and network analysis method (including network mapping, structural and comparative analysis and the data of intraregional and interregional banking network matrices) to assess the changes in regionalization of the EU banking system.
 Findings & Value added: The results of the research show that during post-crisis period both, EU 12 and EU 28, banking networks became more clustered and more decentralized; also the level of regionalization within the EU banking network increased. Such results prove that the EU banking network has undergone structural changes with respect to bilateral interbank cross-border claims. This research adds to the knowledge of regionalization processes within the EU banking network during the post-crisis period and intends to be beneficial for market participants, EU level governmental bodies and financial policy makers.

An evolution of global and regional banking networks: A focus on Japanese banks’ international expansion

We study the transmission of financial sector shocks across borders through international bank connections. For this purpose, we use data on long-term interbank loans among more than 6,000 banks during 1997-2012 to construct a yearly global network of interbank exposures. We estimate the effect of direct (first-degree) and indirect (second-degree) exposures to countries experiencing systemic banking crises on bank profitability and loan supply. We find that direct exposures to crisis countries squeeze banks' profit margins, thereby reducing their returns. Indirect exposures to crisis countries enhance this effect, while indirect exposures to non-crisis countries mitigate it. Furthermore, crisis exposures have real effects in that they reduce banks' supply of domestic and cross-border loans. Our results, based on a large global sample, support the notion that interconnected financial systems facilitate shock transmission.

The aim of our study was to examine sex-specific associations between different aspects of socioeconomic status (SES) (educational level, occupational status, income) and lung function in a general adult population. In the Hordaland County Cohort Study, 1,644 subjects aged 26-82 yrs at baseline answered questionnaires and performed post-bronchodilator spirometry both in 1996-1997 and in 2003-2006. We performed adjusted linear regression analysis on the effect of SES on decline in forced experimental volume in 1 s (FEV(1)), forced vital capacity (FVC) and FEV(1)/FVC. Mean annual decline in FEV(1) from baseline to follow-up was 57 mL (se 1.3) and 48 mL (se 1.0) for males and females, respectively. Males had a larger decline in FVC than females, while females had a larger decline in FEV(1)/FVC. Lower education and low occupational status were associated with larger male lung function decline. SES did not affect female lung function decline. However, marital status was a significant predictor; unmarried females had less decline than both married and widowed females in both FEV(1) (adjusted mean annual difference 8 mL and 16 mL) and FVC (adjusted mean annual difference 8 mL and 18 mL). Low SES was associated with increased lung function decline in males. For females, marital status was more important.

Effective implementation and enforcement of laws and regulations will to a large extent determine how successful the Belt and Road Initiative (BRI) turns out to be. Mutual respect and trust between trading partners is crucial. This chapter explores how the various legal and regulatory systems can be developed to encourage and enhance trustworthy behavior. The countries involved in Belt and Road (BR) are very varied in their legal and regulatory approaches, ranging from those which rely heavily on religious teachings to those with common law or civil law traditions. Each type of law takes a different approach to matters which are relevant to trustworthiness. Achieving a sustainable legal and regulatory framework for BR requires, as a matter of urgency, that attention is given to how the various legal systems interact. BR follows a long tradition whereby the Silk Road facilitated interchange between the great civilisations of China, Mesopotamia, Persia, India and Rome, and later Europe. Achieving this will require that trust between nations is established, not only at the highest levels of government, but also between individuals, companies and communities. Lack of trustworthy behaviour can adversely affect relations between governments (for example, between Greece and Europe), between companies (leading to numerous defaults and corporate failures, including those which accompanied the Global Financial Crisis (GFC)) and between individuals. In what follows, we explore the various methods whereby shared values (or at least a set of shared beliefs) can be developed, in order to ensure that the behaviour of those in authority is trustworthy. This varies from country to country, from sector to sector, and under different legal traditions. In doing this we draw on work carried out at Oxford and elsewhere on how trustworthy behaviour can be encouraged. We argue that it is the role of the Law, including in bilateral and multilateral trading arrangements, to ensure that relationships between market players and stakeholders are as fair and transparent as possible, through mechanisms that influence norms and hold those who behave in untrustworthy ways to account. Chinese law and practice is contrasted with those in other jurisdiction in order to explore the relative merits of each. Sustainability of the BR legal system requires consensus and long-term sustainable relationships.

Purpose – Compliance is defined as conforming to a rule, such as a policy framework, standard or law. Regulatory compliance encompasses all processes that require an entity to be aware of and conform to relevant regulations. As a result, organisation of compliance function remains complex due to the overwhelming set of compliance requirements that exert pressure on various business segments. This report aims to investigate how banks and financial services firms are responding to the regulatory-driven changes to the current compliance landscape, with particular attention paid to nascent challenges and structural changes affecting the organisation of compliance. Design/methodology/approach – The current research project is based on in-depth, semi-structured interviews with five universal banks and three financial services firms to pursue the best practices of adapting to the accelerating change in the regulatory-driven compliance landscape. Findings – In the aftermath of the global financial crisis, banks and financial institutions across the globe have been required to adapt to numerous regulatory reforms that are exerting increased pressure on compliance functions. Amid recent events of multi-million fines to banks that displayed flawed surveillance systems and control failings, the changing regulatory landscape has shown that the relationship with the regulators and compliance with the new regulatory frameworks is a difficult process even for the tier-1 global banks. Originality/value – Embarking on a peer review of the structures, roles, strategies and responsibilities of different compliance functions across banks and financial services institutions, this paper provides advice to financial institutions on ways of dealing with the complex emerging issues to ensure that the regulatory and compliance arrangements do not turn detrimental. At this point, the paper recognizes that the precise design of a compliance function will vary across individual banks and financial services firms. Nonetheless, this paper addresses the root issues and characteristics that are commonly shared despite the differences in organisations of compliance.

<p>This Master‘s thesis seeks to consider the impacts of institutional distance regarding IPR protection on Foreign direct investment’s (FDI) internationalization strategies. Estimated at approximately US$ 1.8 trillion in 2015 and sitting at its highest level since the global economic and financial crisis in 2008 (UNCTAD, 2016), FDI flows are fast becoming a focal issue of global business. Developing Asia, for example, has emerged as the world’s largest FDI recipient region in the world, which has attracted a wide and public attention. China, in particular, is the largest recipient of FDI among the emerging economies. In 2014, it overtook the US as the most popular destination for multinational enterprises (MNEs). To date, most academic interest has focused on how the institutional environment of the host country affects both the overall volumes of FDI (e.g., Lee & Mansfield, 1996; Smarzynska Javorcik, 2004), and the modes of entry strategy (e.g., McCalman, 2004; Dikova & Witteloostuijn, 2007). However, other areas of research also consider institutional distance, and the magnitudes and asymmetric effects of institutional distance (e.g., Cuervo-Cazurra & Genc, 2011; Phillips, Tracey, & Karra, 2009; Zaheer et al., 2012). In this context, this thesis, uses China as a sample of FDI recipient to seek to understand how the directions of institutional distance affect FDI’s flows and MNEs’ choice of entry mode into the host country. In particular, the research questions being addressed in this study are: (1) How does the bidirectional distance between home and host country regarding IPR protection affect FDI’s inflows to China? and (2) How does this bidirectional distance regarding IPR protection influence MNEs’ choice of entry mode? Using a quantitative research design, two dependent variables are examined in this study: FDI inflows and entry mode (wholly-owned subsidiaries (WOS) versus joint ventures (JVs)). Using the institutional theory as its theoretical underpinning, this study hypothesizes that IPR distance between home and host countries negatively affects FDI inflows to the host market. It also hypothesizes that IPR distance is positively related to MNEs’ choice of WOS as an entry mode as opposed to JVs. Both hypotheses build on the new notion regarding the directions of institutional distance that MNEs’ strategies and behaviours are divided into positive and negative directions. This consideration of directions of institutional distance differs to that of the general institutional approach, which typically clusters all regulative, normative and cognitive pillars within the institutional distance. However, this research focuses on the single regulative distance of IPR protection. Using the 691 collected observations of FDI flows to China from 2006 to 2012, hypothesis 1 was tested by employing the estimation techniques of panel linear regression. To further assess hypothesis 2, 801 instances of foreign market entry of FDI in China between 2008 and 2012 were analysed by logistic regression. From the panel linear regression model, the empirical results show that the larger the distance of IPR protection between home and host countries, the fewer the flows of FDI that entered into China. Such results are consistent with previous mainstream literature suggesting that greater institutional distance significantly diminishes the MNEs’ intentions to invest (e.g., Du, 2009; Berry et al., 2010). Moreover, logistic regression for hypothesis 2 reveals that IPR distance appears to be significantly and positively associated with the choice of WOS. This means that the tendency of MNEs from countries with a higher distance of IPR protection to enter China’s market by means of WOS (as opposed to JVs) will decrease. This result is in line with previous studies that note that larger institutional distance is associated with a lower level of equity ownership mode, such as JVs over WOS (e.g., Xu et al., 2004; Xu & Shenkar, 2002; Estrin et al., 2009). The greatest takeaway from this study is that it advances knowledge about the impact of the directions of IPR distance and provides new opinions on the debate around the asymmetric effect of institutional distance on internationalization decisions. This study also offers practical implications for both firm managers and public policy makers.</p>

The scale, scope, and effects of the 2008 global financial crisis revealed several lapses in the regulatory, corporate governance, and operational strategies of banks. Understanding the changes and recent trends in global banking is essential for appraising the policy and practical strategies of future banking in Africa and other developing regions. This chapter employs thematic content analysis to examine the changes that have occurred in global banking since the crisis; including power shifts, regulatory changes, corporate governance issues, and operational strategies, among others. In addition, the chapter also discusses the current challenges and opportunities in global banking and the role of information communication technology and financial integration. The implications of these changes for future banking in Africa are also highlighted.KeywordsGlobal BankingBanksRecent developmentsAfrica

BackgroundIntracellular skeletal muscle water is redistributed into the extracellular compartment during periods of dehydration, suggesting an associated decline in muscle volume. The purpose of this study was to evaluate skeletal muscle volume in active (knee extensors (KE)) and less active (biceps/triceps brachii, deltoid) musculature following dehydration induced by exercise in heat.MethodsTwelve participants (seven men, five women) cycled in the heat under two conditions: (1) dehydration (DHYD) resulting in 3% and 5% losses of estimated total body water (ETBW), which was assessed by changes in body mass, and (2) fluid replacement (FR) where 3% and 5% losses of ETBW were counteracted by intermittent (20 to 30 min) fluid ingestion via a carbohydrate-electrolyte beverage. During both conditions, serum osmolality and skeletal muscle volume (assessed by magnetic resonance imaging) were measured at baseline and at the 3% and 5% ETBW loss measurement points.ResultsIn DHYD, serum osmolality increased at 3% (p = 0.005) and 5% (p < 0.001) ETBW losses, while FR decreased serum osmolality at the 5% loss of ETBW time point (p = 0.009). In DHYD, KE muscle volume declined from 1,464 ± 446 ml to 1,406 ± 425 ml (3.9%, p < 0.001) at 3% ETBW loss and to 1,378 ± 421 ml (5.9%, p < 0.001) at 5% ETBW loss. The largest decline in KE volume in DYHD occurred in the mid-belly (31 ml, p = 0.001) and proximal (24 ml, p = 0.001) regions of the grouped vasti muscles. There were no changes in volume for the biceps/triceps (p = 0.35) or deltoid (p = 0.92) during DHYD. FR prevented the loss of KE muscle volume at 3% (1,430 ± 435 ml, p = 0.074) and 5% (1,431 ± 439 ml, p = 0.156) ETBW loss time points compared to baseline (1,445 ± 436 ml).ConclusionsFollowing exercise in the heat, the actively contracting muscles lost volume, while replacing lost fluids intermittently during exercise in heat prevented this decline. These results support the use of muscle volume as a marker of water loss.

This paper studies the interconnectedness of the global financial system and its susceptibility to shocks. A novel multilayer network framework is applied to link debt and equity exposures across countries. Use of this approach—that examines simultaneously multiple channels of transmission and their important higher order effects—shows that ignoring the heterogeneity of financial exposures, and simply aggregating all claims, as often done in other studies, can underestimate the extent and effects of financial contagion.The structure of the global financial network has changed since the global financial crisis, impacted by European bank’s deleveraging and higher corporate debt issuance. Still, we find that the structure of the system and contagion remain similar in that network is highly susceptible to shocks from central countries and those with large financial systems (e.g., the USA and the UK). While, individual European countries (excluding the UK) have relatively low impact on shock propagation, the network is highly susceptible to the shocks from the entire euro area. Another important development is the rising role of the Asian countries and the noticeable increase in network susceptibility to shocks from China and Hong Kong SAR economies.

Over the last three decades, China has experienced the most dynamic economic development lifting living standards and resulting in fast‐growing use of natural resources. In the past, the focus has been on national MFA accounts which do not do justice to the second largest economy, home to 19% of the world population and having 30% of global material use. In this research, we calculate material extraction for China at the regional level during 1995–2015 using the most recent available statistical data and applying the most up‐to‐date international calculation methods. In particular, we combine a bottom‐up and top‐down approach for constructing the dataset of China's economically used Domestic Extraction (DEU) in an integrated way. This approach also improves the Chinese national material flow accounts and allows us to present a reliable database of DE of materials for China to date. Our new dataset provides the basis for calculating material footprints and environmental impacts of China's regions. The dataset enables us to evaluate regional resource efficiency trends in China. We find that during the past two decades, China's material use has grown strongly from 11.7 billion tonnes in 1995 to 35.4 billion tonnes in 2015. Material use has accelerated between 2000 and 2010 but slowed down between 2010 and 2015 reflecting the economic contraction caused by the Global Financial Crisis which reduced the global demand for China's manufacturing and a reorientation of China's economic policy settings toward quality of growth. Unsurprisingly, different regions play different roles in the supply chain of materials, achieving different economic performances resulting in very diverse material efficiency outcomes. This information is important to allow for a targeted policy approach to increase resource efficiency, reduce environmental impacts of resource use, and grow wellbeing in China with large positive implications for global sustainability. This study provides the basis for the development of relevant resource management policies for different regions in the future.

ObjectiveCross-sectional genetic association studies have reported equivocal results on the relationship between the brain-derived neurotrophic factor (BDNF) Val66Met and risk of Alzheimer’s disease (AD). As AD is a neurodegenerative disease, genetic influences may become clearer from prospective study. We aimed to determine whether BDNF Val66Met polymorphism influences changes in memory performance, hippocampal volume, and Aβ accumulation in adults with amnestic mild cognitive impairment (aMCI) and high Aβ.MethodsThirty-four adults with aMCI were recruited from the Australian, Imaging, Biomarkers and Lifestyle (AIBL) Study. Participants underwent PiB-PET and structural MRI neuroimaging, neuropsychological assessments and BDNF genotyping at baseline, 18 month, and 36 month assessments.ResultsIn individuals with aMCI and high Aβ, Met carriers showed significant and large decline in episodic memory (d = 0.90, p = .020) and hippocampal volume (d = 0.98, p = .035). BDNF Val66Met was unrelated to the rate of Aβ accumulation (d = −0.35, p = .401).ConclusionsAlthough preliminary due to the small sample size, results of this study suggest that high Aβ levels and Met carriage may be useful prognostic markers of accelerated decline in episodic memory, and reductions in hippocampal volume in individuals in the prodromal or MCI stage of AD.

Brain atrophy, in excess of that seen with normal aging, has been observed early in the clinical course of relapsing-remitting multiple sclerosis (RRMS). Previous work has suggested that at this stage of the disease, gray matter (GM) atrophy progresses more rapidly than the white matter (WM) atrophy. To characterize the evolution of GM and WM volumes over 2 years, and their associations with lesion loads in a cohort of patients with clinically early RRMS. Twenty-one patients with RRMS (mean age 37.5 years, mean disease duration from symptom onset 2.1 years) and 10 healthy control subjects (mean age 37.1 years) were studied. Tissue volumes, as fractions of total intracranial volumes, were estimated at baseline and 1- and 2-year follow-up. Brain parenchymal fractions (BPF), GM fractions (GMF), and WM fractions (WMF) were estimated. In subjects with MS, brain lesion loads were determined on conventional T2-weighted along with pre- and post-gadolinium (Gd) enhanced T1-weighted images at each timepoint. A decrease in GMF was observed in subjects with MS vs normal controls over the 2 years of the study (mean -2.1% vs -1.0%, p = 0.044), while no change was seen in WMF over the same period (mean -0.09% vs +0.09%, p = 0.812). However, when the MS cohort was divided in half, dependent upon change in Gd-enhancing lesion load over 2 years (n = 20), a decrease in WMF was seen in the group (n = 10) with the largest decline in Gd volume, whereas WMF increased in the other half (n = 10) concurrent with a net increase in volume of Gd-enhancing lesions (difference between groups: p = 0.034). Increasing gray matter but not white matter (WM) atrophy was observed early in the clinical course of relapsing-remitting multiple sclerosis. Fluctuations in inflammatory WM lesions appear to be related to volume changes in WM over this time period.