Tracing the International Transmission of a Crisis Through Multinational Firms

Marcus Biermann and Kilian Huber

No 31061, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that multinational firms transmit shocks across countries through their internal capital markets. We study a credit supply shock to parent firms in Germany. International affiliates outside Germany supported their parents through internal lending, became financially constrained themselves, and experienced lower real growth. We find that managers were "Darwinist" with respect to international affiliates but "Socialist" in the home country, that internal capital markets transmitted the credit shock more strongly than a non-financial shock, and that access to developed credit markets attenuated the real effects. The total real impact of shock transmission through multinationals on foreign economies was large.

JEL-codes: E4 F2 F3 G01 G2 G3 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-cfn, nep-des, nep-fdg, nep-ifn, nep-mac and nep-opm
Note: CF EFG IFM IO ITI LS ME PR
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Published as MARCUS BIERMANN & KILIAN HUBER, 2024. "Tracing the International Transmission of a Crisis through Multinational Firms," The Journal of Finance, vol 79(3), pages 1789-1829.

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