Financial contagion can spread across borders from "summary" of International Money and Finance by Michael Melvin
Financial contagion refers to the situation where financial distress in one country spills over into other countries through various channels. This phenomenon is particularly concerning in today's globalized financial system, where countries are more interconnected than ever before. When a financial crisis hits a country, it can quickly spread to other countries through trade, investment, and financial linkages. One of the main channels through which financial contagion spreads across borders is through trade. In an interconnected world, countries rely on each other for goods and services. When one country experiences a financial crisis, its trading partners may also suffer as demand for their exports declines. This can lead to a domino effect, with countries around the world being affected by the initia...
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