18 Forbes and Warnock (2012) present evidence that high capital inflows can end suddenly, with global factors typically more important than the domestic macroeconomy. 19 Cesa-Bianchi et al (2017) find that foreign credit growth is a strong predictor of financial crises, over and above domestic credit growth. The result is driven by a combination of contagion from foreign crises, capital inflows and (global) market sentiment. 20 The first number is the April 2008 Global Financial Stability Report’s estimated subprime-related global bank losses as of March 2008 (IMF (2008), Table 1.6). The second number is the April 2009 Global Financial Stability Report estimated potential total mature economies banking sector write-down for the 2007-2010 period (IMF (2009), Table 1.3). The corresponding April 2010 Global Financial Stability Report estimate revises this number down to 2.3 trillion (IMF (2010), Table 1.2). 21 Bardoscia et al (forthcoming). 22 Cont and Schaanning (2014). 23 This was revealed during the crisis where some investors – typically ‘shadow banks’, which took bank-like risks but without being subject to commensurate regulatory standards – funded their investment in long-term securitised assets with short-term asset-backed commercial paper. When this funding was withdrawn during the crisis, it resulted in a sell-off of these long-term assets, depressing their price (Brunnermeier, 2009). 24 Regulated open-ended funds include mutual funds, exchange-traded funds, and institutional funds. Based on BlackRock, The Investment Company Institute and Bank calculations. 25 In 2015, Bank and FCA staff conducted a joint information-gathering exercise on investment funds with large holdings of corporate bonds.

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