As Lane notes: “In both directions, banks were the main proximate investor in other banks, so were instrumental in the cross-border retrenchment as part of the general breakdown in interbank markets during the crisis. While individually rational, the collective exit from these markets contributed to the illiquidity problems that defined the acute phase of the crisis.
Given the lack of an adequate international regulatory framework, cross-border liquidity runs were more difficult to forestall than domestic liquidity runs.” Other research also showed that banks were most likely to withdraw capital from countries that were geographically more remote from the home market.