Multiplex Financial Network Regionalization Scenarios as a Result of Re-globalization: Does Geographical Proximity Still Matter?

Re-globalization is a currently understudied topic and previous research focuses mostly on theoretical discussion of the problem. Empirical re-globalization related research suggests that re-globalization in terms of structural changes in financial network did not start recently, but was already observed after global financial crisis. It might have been further strengthened by pandemic and recent geopolitical tensions, but these tendencies have not been tested empirically. Among possible scenarios of re-globalization, most likely are discussed to be geographical regionalization or ally-based bipolar regionalization. Therefore, we aim to test these scenarios empirically. Using 5-layer multiplex financial network data of 2009–2020 from 234 countries, we found that multiplex financial network appears to be already highly regionalized, but regionalization and globalization appears to be not contradictory processes. Geographical regionalization did not increase in terms of shifting interregional investment to intraregional territory as interregional investment network density and value also increased as well as intraregional. The world appears to have become bipolarly ally-regionalized with 2 main communities - US & Europe vs. China. However, it is worth noting that Europe’s role is still unclear as not all European countries belong to the same identified cluster. Future research could aim to explore in detail what are the main factors affecting ally-familiarity based region formation.