This paper studies the implications of cross-border financial integration for financial stability when banks' loan portfolios adjust endogenously. Banks can be subject to sectoral and aggregate domestic shocks. After integration they can share these risks in a complete interbank market. When...

Global supply chains reshaped international trade since the 1980s. Their role in explaining the trade collapse that followed the financial crisis of September 2008 was determinant. Because manufacture production is internationally fragmented, adverse external shocks affect firms not only through...