Hitotsubashi Institute for Advanced Study


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


This paper examines the possible spillover effects of the global and regional cross-border claims of Japanese banks on domestic financial stability. We contribute to the existing literature by constructing a global banking network and applying the Spinglass methodology to detect communities formed within the network. Furthermore, we employ a novel spatial econometric approach, namely, a time-varying spatial autoregressive (SAR) model that captures the evolution of spillover effects over time. Our empirical results point to the dominant role of Japanese banks in the global banking network and the evolution of the East Asian regional banking network. Furthermore, our findings show considerable variation in the degree of influence of both the global and regional banking networks over time.

Report No.: HIAS-E-120
Author(s): Michael Harrison (a), Jouchi Nakajima (b), Mimoza Shabani (c)
Affiliation: (a) University of East London
(b) Hitotsubashi University
(c) University of East London
Issued Date: April 2022
Keywords: banking networks, spillover effect, spatial autoregression
JEL: C23, G21, F34, R11