Macau skyline at night

The International Financial System and China

The International Financial System shapes how capital and risk are allocated and shared internationally, in particular via cross-border financial flows (equity, debt and direct investments). Our research group studies the drivers and outcomes of international capital flows, both in history and today, drawing on decades or even centuries of newly collected data. We place a particular focus on the role of the state in influencing international capital flows, as well as the rise of China in global financial markets. Specifically, we study the following questions:

  • Why do states cooperate financially and assist each other during times of macroeconomic and political crises?
  • Should the current global financial architecture be reformed? Relatedly, what is the optimal design of sovereign bailout policies?
  • Official international lending: What are the determinants and consequences of state-driven cross-border investments?
  • What is the impact of Chinese overseas lending in receiving countries and the international financial system at large?
  1. Working Paper

    China as an International Lender of Last Resort

    Kiel Working Papers
    03/2023
    Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart ...

    This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. It builds the...

  2. Journal Article

    Hidden Defaults

    American Economic Review Papers& Proceedings
    05/2022
    Sebastian Horn, Carmen M. Reinhart, Christoph Trebesch

    China's lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China's loans, the...

  3. Working Paper

    Hidden Defaults

    Kiel Working Papers
    01/2022
    Sebastian Horn, Carmen M. Reinhart, Christoph Trebesch

    China’s lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China’s loans, also...