# Cross-Border Direct Banking Exposures in Asian Economies: An Assessment of Counterparty Risk Rankings

- Link: https://www.thailand-business-news.com/banking/255205-cross-border-direct-banking-exposures-in-asian-economies-an-assessment-of-counterparty-risk-rankings
- Published: 2025-11-04T09:13:00+07:00
- Author: News Desk

**This paper presents a portfolio-based framework for systemic risk in banking networks,
highlighting diversification, institution-specific shocks, and contagion, emphasizing
multi-pronged analytical methods for effective supervisory practices.**

## Framework for Systemic Risk Assessment

This paper introduces a portfolio-based framework designed to evaluate systemic 
risk in cross-border banking networks. Utilizing three complementary measures, it
assesses distinct risk dimensions: diversification, institution-specific shocks,
and contagion potential. Although there are limitations due to indirect exposures
and the absence of bank-level bilateral data, this framework is crucial for surveillance.
It helps identify jurisdictions that need enhanced supervisory attention.

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## Empirical Application and Findings

The empirical analysis reveals significant variations in systemic risk profiles 
across different banking systems. While diversification provides resilience in some
cases, concentrated exposures can amplify vulnerabilities in others. These findings
highlight the necessity of understanding how different factors contribute to systemic
risk. By focusing on these variations, supervisory practices can be fine-tuned to
address specific vulnerabilities in different banking environments.

## Importance of Multi-Pronged Methods

The results emphasize the need for multi-pronged analytical approaches in supervisory
practices. By employing various methods, it becomes easier to allocate monitoring
resources effectively. This strategy ensures that emerging systemic vulnerabilities
are targeted swiftly, helping to safeguard the overall stability of global banking
systems. Through this approach, oversight can be more dynamic and responsive to 
potential risks.

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Source: [Cross-Border Direct Bank Exposures in Asian Economies: A Counterparty Risk Ranking Assessment – ASEAN+3 Macroeconomic Research Office ](https://amro-asia.org/cross-border-direct-bank-exposures-in-asian-economies-a-counterparty-risk-ranking-assessment)