Template-Type: ReDIF-Paper 1.0
Author-Name:  Lorenz Emter
Author-X-Name-First: Lorenz
Author-X-Name-Last: Emter
Author-Name: Laura Kuitunen
Author-X-Name-First: Laura
Author-X-Name-Last: Kuitunen
Author-Name: Arnaud Mehl
Author-X-Name-First: Arnaud
Author-X-Name-Last: Mehl
Author-Name: Peter McQuade
Author-X-Name-First: Peter
Author-X-Name-Last: McQuade
Author-Name: Swapan-Kumar Pradhan
Author-X-Name-First: Swapan-Kumar
Author-X-Name-Last: Pradhan
Author-Name: Goetz von Peter
Author-X-Name-First: Goetz
Author-X-Name-Last: von Peter
Title: Global banking and geopolitics through time
Abstract: This paper examines asymmetries in the effects of geopolitical events on international bank credit, contrasting adverse events, such as the 2022 invasion of Ukraine, with positive events like the fall of the Berlin Wall in 1989. Using confidential data from the BIS International Banking Statistics from 1977 to 2024, we analyze credit dynamics between up to 12,000 pairs of countries through the lens of their geopolitical differences. Our findings reveal that such differences impact international banking activity over time. Negative events reduce credit by 10-20% more between geopolitical blocs than they do within blocs. In contrast, positive events have no comparable effect on credit, even when boosting trade flows. We hypothesize that this asymmetry stems from the higher level of trust required for international bank credit compared to trade in goods, as the former involves a more pronounced intertemporal dimension, demanding a greater degree of commitment over time.
Creation-Date: 2026-03
File-URL: https://www.bis.org/publ/work1338.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1338.htm
File-Format: text/html
Number: 1338
Keywords: geoeconomics, geopolitics, international finance, global banking, residence, nationality, asymmetric effects, trust
Classification-JEL: F2, F3, D74, H56, N40
Handle: RePEc:bis:biswps:1338