Freeze! Financial Sanctions and Bank Responses

Matthias Efing, Stefan Goldbach and Volker Nitsch

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: Using regulatory data, we study German bank lending in countries targeted by financial sanctions. We find that domestic banks in Germany reduce lending in sanctioned countries, whereas their foreign bank affiliates outside Germany increase lending. In some cases, this is because the bank affiliates’ host countries have not imposed sanctions themselves. However, even German bank affiliates in host countries that enact sanctions like Germany increase lending if these host countries lack strong institutions and anticrime policies. These findings suggest that even universally adopted sanctions distort bank capital flows and competition if the level of their enforcement varies across bank locations.

Date: 2023
New Economics Papers: this item is included in nep-ban and nep-ifn
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Published in The Review of Financial Studies (2023) : pp. 1-54

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Related works:
Journal Article: Freeze! Financial Sanctions and Bank Responses (2023)
Working Paper: Freeze! Financial sanctions and bank responses (2019)
Working Paper: Freeze! Financial Sanctions and Bank Responses (2018)
Working Paper: Freeze! Financial sanctions and bank responses (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:137895

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