The recent crisis highlighted the role of cross-border banking linkages. This paper analyzes these linkages through an examination of both banking systems' foreign credit exposures and borrower countries' reliance on foreign bank credit. It does this by combining BIS data with bank-level data. The results indicate that the proposed refinements on measuring those two exposures are important, especially when foreign bank affiliates' funding relies heavily on local deposits. After developing novel and necessary break-in-series and exchange rate variation adjustments, estimations looking at the driving factors of both measures during 2006-2012 highlight: (i) the role of systemic banking crises and global financial conditions in the evolution of banks' foreign credit exposures; (ii) the role of a larger set of factors in the case of the evolution of borrower countries' reliance on foreign bank credit-how countries borrowed, from whom they borrowed, and global financial and domestic demand conditions. © 2015 International Monetary Fund.

financial crisis Cross-border banking linkages Contagion vulnerabilities

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