Skip to main content
SpringerLink
Log in

A Global Flow of Funds Perspective on Debt, Assets, and Imbalances

  • Chapter
  • First Online:
Global Flow of Funds Analysis

  • 68 Accesses

Abstract

This chapter establishes an analytical framework for examining the global flow of funds (GFF); expanding on the concept, research object, and analytical method for comprehending GFF. The structural changes of the G20, especially China–United States (US) decoupling, are examined alongside the possibility of a debt crisis using stock data to analyze the GFF matrix (GFFM) from 2018 to 2022. The financial network is used to analyze the basic characteristics and risks in the debt market between China (CN) and the US. Finally, CN’s and the US’ debt securities (DS) market positions and mutual financing relationships are analyzed using financial network technology. It also statistically estimates the impact of debt risk transmission. The issues of China–US are also observed in external financial assets and liabilities by stock data. By compiling the GFFM and using the financial network, we measure the risk exposure changes between CN and US external assets and liabilities, centrality, asset influence and liability sensitivity, and debt risk.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 109.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 139.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Financial Stability Board and IMF (2009) “The Financial Crisis and Information Gaps”.

  2. 2.

    Errico et al. (2013, 2014).

  3. 3.

    Wall Street Journal (December 7, 2023) Moody’s Faces Growing Backlash Over Its Negative Outlook on China.

  4. 4.

    For the first version of the GFFM, see Zhang and Zhao (2019, 535–536).

  5. 5.

    As of 2020, the G20 members were Argentina (AR), AU, Brazil (BR), CA, CN, the EU, France (FR), IN, Indonesia (ID), Italy (IT), JP, Mexico (MX), Russia (RU), Saudi Arabia (SA), South Africa (ZA), Korea (KR), Turkey (TR), and the US. Singapore (SG) is a permanent guest invitee. Due to G20 restrictions, aside from FR, DE, and IT, which are also EU members, Switzerland (CH), Spain (ES), Luxembourg (LU), and the Netherlands (NL) were selected to represent the EU; therefore, the observations and analysis in this study include 24 countries and OE.

  6. 6.

    IMF (2023) Coordinated Portfolio Investment Survey, https://data.imf.org/regular.aspx?key=60587815.

  7. 7.

    See Zhang (2020, 312–313) for a detailed compilation method; its gist is in the Appendix.

  8. 8.

    Leontief (1941).

  9. 9.

    See Appendix: (2) for the calculation method of PDI and SDI in Chap. 2 for details.

  10. 10.

    BEA, Table 1.2. US NIIP at the End of the Period (March 29, 2022).

References

  • Acemoglu, D., Ozdaglar, A., & Tahbaz-Salehi, A. (2015). Systemic risk and stability in financial networks. American Economic Review, 105(2), 564–608.

    Google Scholar 

  • Arajo, T., & Lou, F. (2007). The geometry of crashes: A measure of the dynamics of stock market crises. Quantitative Finance, 7(1), 63–74.

    Article  MathSciNet  Google Scholar 

  • Bavelas, A. (1950). Communication patterns in task-oriented groups. Journal of the Acoustical Society of America, 22(6), 725–730.

    Article  Google Scholar 

  • BEA. (2022). U. S. Net International Investment Position at the End of the Period, Table 1.2.

    Google Scholar 

  • Bernhard Winkler, Ad van Riet, and peter Bull. (2013a). A Flow-of-Funds Perspective on the Financial Crisis Volume I: Money, Credit and Sectoral Balance Sheets. Palgrave Macmillan.

    Google Scholar 

  • Bernhard Winkler, Ad van Riet, and peter Bull. (2013b). A Flow-of-Funds Perspective on the Financial Crisis Volume II: Macroeconomic Imbalances and Risks to Financial Stability. Palgrave Macmillan.

    Google Scholar 

  • BIS. (2009). Global Imbalances: In Midstream? In Reconstructing the World Economy, IMF Stuff Discussion Note, Dec. 22. Washington: International Monetary Fund.

    Google Scholar 

  • BIS. (2022). Locational Banking Statistics, http://stats.bis.org/statx/toc/LBS.html.

  • Celestino, G., Marta, R. V., & Matas, A. (2018). Propagation of Quantity Shocks in Who-to-whom Networks’, the” 35th IARIW General Conference. Denmark.

    Google Scholar 

  • Copeland, M. A. (1949). Social accounting for Moneyflows. Accounting Review, 24(3), 254–264.

    Google Scholar 

  • Copeland, M. A. (1952). A study of Moneyflows in the United States. National Bureau for Economic Research Books.

    Google Scholar 

  • Errico, L., Walton, R., Hierro, A., AbuShanab, & Amidžic, G. (2013). Global flow of funds: Mapping bilateral geographic flows. In Proceedings 59th ISI World Statistics Congress, 2825–2830.

    Google Scholar 

  • Errico, L., Harutyunyan, A., Loukoianova, E., Walton, R., Korniyenko, Y., Amidžic, G., AbuShanab, H., & Shin, H. S. (2014). Mapping the shadow banking system through a global flow of funds analysis. IMF Working. https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Mapping-the-Shadow-Banking-System-Through-a-Global-Flow-of-Funds-Analysis-41273. DC: paper P/14/10.Washington.

  • Financial Stability Board, and International Monetary Fund. (2009). The Financial Crisis and Information Gaps. Report to the G—20 Finance Ministers and Central Bank Governors. http://www.imf.org/external/np/g20/pdf/102909.pdf.

  • Freeman, L. C., Roeder, D., & Mulholland, R. R. (1979). Centrality in social networks: II. Experimental Results, Social Networks, 2(2), 119–141.

    Google Scholar 

  • Gourinchas, P. O., Rey, H., & Sauzet, M. (2019). The international monetary and financial system, NBER WORKING PAPER SERIES”, Working Paper 25782. http://www.nber.org/papers/w25782.

  • Gourinchas, P. O., & Rey, H. (2007). International financial adjustment. Journal of Political Economy, 115(4), 665–703. https://doi.org/10.1086/521966

    Article  Google Scholar 

  • IMF. (2014). BPM6 Compilation Guide vol. 144.

    Google Scholar 

  • IMF. (2022a). Coordinated Direct Investment Survey (CDIS). https://data.imf.org/regular.aspx?key=60564262.

  • IMF. (2022b). Coordinated Portfolio Investment Survey (CPIS). https://data.imf.org/regular.aspx?key=60587815.

  • IMF. (2022c). International Investment Position. https://data.imf.org/regular.aspx?key=62805744.

  • IMF. (2022). World Economic Outlook Database April 2022.

    Google Scholar 

  • IMF. (2023). Global debt monito.

    Google Scholar 

  • Ishida, S. (1993). Flow of Funds in the Japanese Economy (in Japanese). Tokyo: Keizai Shimpo-Sha, 169–190.

    Google Scholar 

  • Luiza, A. A. (2015). A network analysis of sectoral accounts: Identifying sectoral interlinkages in G-4 economies, IMF Working. Washington, DC: paper WP/15/111.

    Google Scholar 

  • National Bureau of Statistics of China. (2022). China Statistical Yearbook 2022, China Statistics Press.

    Google Scholar 

  • Newman, M. E. J. (2010). Networks: An introduction. Oxford University Press, 169.

    Google Scholar 

  • Scott Davis, J., & Zlate, A. (2023). The global financial cycle and capital flows during the COVID-19 Pandemic. European Economic Review, 156, 104477. https://doi.org/10.1016/j.euroecorev.2023.104477.

  • Soramäki, K., & Cook, S. (2016). Network theory and financial risk. Risk Books, a Division of Incisive Media Investments Ltd.

    Google Scholar 

  • Spelta, A., & Araújo, T. (2012a). The topology of cross-border exposures: Beyond the minimal spanning tree approach. Physica A: Statistical Mechanics and its Applications, 391(22), 5572–5583

    Google Scholar 

  • Spelta, A., & Araújo, T. (2012b). Interlinkages and structural changes in cross-border liabilities: A network approach, Quaderni di Dipartimento, Working Paper, No. 181.

    Google Scholar 

  • Tsujimura, K., & Tsujimura, M. (2008). International flow-of-funds analysis: Techniques and applications. Keio University Press, 3–59.

    Google Scholar 

  • Tsujimura, M. (2009). The flow of funds analysis of the U.S. subprime crisis. Input-Output Analysis, 17, 1–2, 88–104. https://doi.org/10.11107/papaios.17.88.

  • Wall Street Journal. (2023). Moody’s Faces Growing Backlash Over Its Negative Outlook on China. https://www.wsj.com/world/china/moodys-faces-growing-backlash-over-its-negative-outlook-on-china-87fe7ce6

  • Zhang, N. (2022). Measuring global flow of funds: Who-to-whom matrix and financial network. Japanese Journal of Statistics & Data Science, 5(1), 899–942.

    Article  MathSciNet  Google Scholar 

  • Zhang, N., & Zhao, X. (2019). Measuring global flow of funds: A case study on China, Japan and the United States. Economic Systems Research, 31(4), 520–550. https://doi.org/10.1080/09535314.2019.1574719

    Article  Google Scholar 

  • Zhang, N., & Zhu, L. (2021). Global flow of funds as a network: The case study of the G20. Japanese Journal of Monetary and Financial Economics, 9, 21–56.

    Google Scholar 

  • Zhang, N. (2020). Flow of funds analysis: Innovation & development. Springer, 137–169.

    Google Scholar 

  • Zhang, N. (2005). The theory and practice of global flow of funds (in Japanese), Minerva Shobo Inc. (in Japanese), 75–99.

    Google Scholar 

  • Zhang, N. (2008). Global-flow-of-funds analysis in a theoretical model-what happened in China’s external flow of funds, Kyusyu University Press, quantitative analysis on contemporary. Economic Issues, 103–119.

    Google Scholar 

  • Zhang, N. (2014). The flow of funds analysis in theory and practice. Pekin University Press (in Chinese), 1–65.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Hiroshima Shudo University, Hiroshima, Japan

    Nan Zhang

  2. Cornell University, New York, NY, USA

    Yiye Zhang

Authors
  1. Nan Zhang
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Yiye Zhang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Nan Zhang .

Rights and permissions

Reprints and permissions

Copyright information

© 2024 The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Zhang, N., Zhang, Y. (2024). A Global Flow of Funds Perspective on Debt, Assets, and Imbalances. In: Global Flow of Funds Analysis. Springer, Singapore. https://doi.org/10.1007/978-981-97-1029-4_4

Download citation

Publish with us

Policies and ethics

Search

Navigation