Financial Centrality and Capital Flow Waves : A Network Analysis
This paper investigates the relationship between financial centrality and capital flow waves from a network perspective. Using the BIS CBS dataset on bilateral banking flows from 2000 Q1 through 2021 Q4, we construct several financial centrality measures. Then we discover that financial network centralities play an important role in reducing the occurrence of extreme capital flow movements in the aftermath of the global financial crisis of 2007-2009 (GFC). Therefore, financial network plays a role in explaining why the large global “waves” in international capital flow have more recently become “ripples”