02063cas a2200241 a 4500 AALejournalIMF006784 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455209361 1018-5941 BD-DhAAL BD-DhAAL Tressel, Thierry. Financial Contagion Through Bank Deleveraging : Stylized Facts and Simulations Applied to the Financial Crisis / Thierry Tressel. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (37 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The financial crisis has highlighted the importance of various channels of financial contagion across countries. This paper first presents stylized facts of international banking activities during the crisis. It then describes a simple model of financial contagion based on bank balance sheet identities and behavioral assumptions of deleveraging. Cascade effects can be triggered by bank losses or contractions of interbank lending activities. As a result of shocks on assets or on liabilities of banks, a global deleveraging of international banking activities can occur. Simple simulations are presented to illustrate the use of the model and the relative importance of contagion channels, relying on bank losses of advanced countries' banking systems during the financial crisis to calibrate the shock. The outcome of the simulations is compared with the deleveraging observed during the crisis suggesting that leverage is a major determinant of financial contagion. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2010/236 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/236/001.2010.issue-236-en.xml IMF e-Library