Shocks Abroad, Pain at Home? Bank-Firm Level Evidence on the International Transmission of Financial Shocks
Steven Ongena (),
Jose-Luis Peydro () and
Neeltje Van Horen ()
DNB Working Papers from Netherlands Central Bank, Research Department
We study the international transmission of shocks from the banking to the real sector during the global financial crisis. For identification, we use matched bank-firm level data, including many small and medium-sized firms, in Eastern Europe and Central Asia. We find that internationally-borrowing domestic and foreign-owned banks contract their credit more during the crisis than domestic banks that are funded only locally. Firms that are dependent on credit and at the same time have a relationship with an internationally-borrowing domestic or a foreign bank (as compared to a locally-funded domestic bank) suffer more in their financing and real performance. Single-bank-relationship firms, small firms and firms with intangible assets suffer most. For credit-independent firms, there are no differential effects. Our findings suggest that financial globalization has intensified the international transmission of financial shocks with substantial real consequences
Keywords: international transmission; firm real effects; foreign banks; international wholesale funding; credit shock (search for similar items in EconPapers)
JEL-codes: G01 G21 F23 F36 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-ifn, nep-opm and nep-tra
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Working Paper: Shocks Abroad, Pain at Home? Bank-firm Level Evidence on the International Transmission of Financial Shocks (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:385
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