Global Financial Network and Liquidity Risk

Posted: 10 Nov 2018

See all articles by John Nkwoma Inekwe

John Nkwoma Inekwe

Macquarie University

Yi Jin

Southwestern University of Finance and Economics (SWUFE)

Maria Rebecca Valenzuela

Monash University - Department of Economics

Date Written: July 24, 2018

Abstract

This article investigates the impact of global financial integration on liquidity risk. Using the network approach and bank-level data for 95 countries, we find weak asymmetry in the relationship between net stable funding and financial connectedness. Our results suggest that the degree of connectedness between banks is inversely related to funding stability. We also find that banks that are strongly connected to important lenders take on more risks relative to those that have independent access to finance in the financial network. Our results are consistent and invariant when either internal or external instruments are used to resolve econometric issues.

Keywords: Financial Markets, Financial Networks, Lending, Liquidity Risk

Suggested Citation

Nkwoma Inekwe, John and Jin, Yi and Valenzuela, Maria Rebecca, Global Financial Network and Liquidity Risk (July 24, 2018). Australian Journal of Management, Vol. 43, No. 4, 2018, Available at SSRN: https://ssrn.com/abstract=3269362

John Nkwoma Inekwe

Macquarie University ( email )

North Ryde
Sydney, New South Wales 2109
Australia

Yi Jin (Contact Author)

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Maria Rebecca Valenzuela

Monash University - Department of Economics

Australia

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