“…Third, the paper is related to the literature on international capital flows and the global financial cycle. This literature has documented a large comovement in debt and equity prices across countries (see, e.g., Forbes and Rigobon (2002), Longstaff, Pan, Pedersen, and Singleton (2011), Borri and Verdelhan (2011)), a strong link between international capital flows, domestic lending, and the occurrence of “sudden stops” in emerging economies (examples include Calvo (1998), Mendoza (2010), Rey (2015), Kalemli‐Özcan (2019)), and a relevant role of global banks in the transmission of international shocks (see, e.g., Devereux and Yetman (2010), Cetorelli and Goldberg (2011), Bruno and Shin (2015b), Baskaya, di Giovanni, Kalemli‐Ozcan, and Ulu (2017), Cao, Minetti, Olivero, and Romanini (2020), Correa, Du, and Liao (2020)). Our paper shows that global financial intermediaries can play a central role in these patterns.…”