Download or read book Real and Financial Vulnerabilities from Crossborder Banking Linkages written by Kyunghun Kim and published by International Monetary Fund. This book was released on 2014-07-25 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper looks at the vulnerabilities stemming from banking sector linkages between countries and their macroeconomic effects. It finds that credit risks (from a banking system’s claims on other countries) and funding risks (from a banking system’s liabilities to another) have declined over the past five years. It also finds that funding vulnerabilities have real effects. During normal times, funding vulnerabilities are associated with significant positive GDP growth surprises. During crisis times, funding vulnerabilities are associated with significant negative GDP growth surprises. The results tell us that policymakers should pay more attention to understanding crossborder funding risks.