Handbook of Safeguarding Global Financial Stability

Chapter 14

Financial Contagion

R. Kollmann*,^†,‡ and F. Malherbe^§

^*ECARES, Université Libre de Bruxelles, Brussels, Belgium

^†Université Paris-Est, Paris, France

^‡Centre for Economic Policy Research, London, UK

^§London Business School, London, UK

Outline

Introduction

Bank Balance Sheet Adjustments as a Channel of Contagion: The International Financial Multiplier

Financial Contagion Through Interbank Linkages

Bank Runs and Self-Fulfilling International Crises

Glossary

Further Reading

Relevant Websites

Financial contagion refers to the strong and rapid spread of a financial crisis across markets, sectors, or countries. This chapter discusses recent theories of financial contagion in which balance sheets of global banks (and other financial institutions) ...