EconPapers    
Economics at your fingertips  
 

Financial Crises and the Global Supply Network: Evidence from Multinational Enterprises

Sergi Basco, Giulia Felice, Bruno Merlevede and Martí Mestieri

No 18163, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper empirically examines the effects of financial crises on the organization of production of multinational enterprises. We construct a panel of European multinational networks from 2003 through 2015. We use as a financial shock the increase in risk premia between August 2007 and July 2012 and build a multinational-specific shock based on the network structure before the shock. Multinationals facing a larger financial shock perform worse in terms of revenue, employment, and growth in the number of affiliates. Lower growth in the number of affiliates operates through a negative effect on domestic and foreign affiliates, and is concentrated in affiliates in a vertical relationship with the parent. These effects built up slowly over time. Negative effects are driven by multinationals with initially more leveraged parents, who adjust to the financial shock by reducing relatively more the number of foreign affiliates. These findings lend support to the hypothesis of financial frictions shaping multinational activity.

JEL-codes: F14 F23 F44 L22 L23 (search for similar items in EconPapers)
Date: 2023-05
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18163 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Financial crises and the global supply network: Evidence from multinational enterprises (2024) Downloads
Working Paper: Financial Crises and the Global Supply Network: Evidence from Multinational Enterprises (2023) Downloads
Working Paper: Financial Crises and the Global Supply Network: Evidence from Multinational Enterprises (2023) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18163

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18163

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-23
Handle: RePEc:cpr:ceprdp:18163