Abstract
We show that fluctuations in the ratio of noncore to core funding in the banking systems of advanced economies are largely driven by three global factors of both real and financial natures, with country-specific factors playing only a minor role. Exchange rate flexibility helps insulate the noncore to core ratio from such global factors. This insulation is stronger in periods away from global crises. Tighter prudential regulations appear to have a complementary effect to exchange rate insulation.