In the last half of this decade, the increase in the share of loans to non-banks in the Gulf States is noticeable, and it reflects the internationalization strategy of banks which have favored extending credit by local affiliates to cross-border lending. Until the beginning of this decade, international banking growth tracked well the increasing world integration as measured by international trade growth.
More recently, however, cross-border flows have grown faster than international trade reflecting the emergence of risk transfer and securitization thus making international banking an important component of a broader process of globalization and integration. Capital flows have not been uniformly distributed across countries, and a crosscountry analysis of net international positions show large imbalances and persistent net creditor and debtor positions (Figure 2).