Relationship Networks in Banking Around a Sovereign Default and Currency Crisis
Pablo D'Erasmo (),
Hernan Moscoso Boedo,
Maria Olivero () and
No 19-43, Working Papers from Federal Reserve Bank of Philadelphia
We study how banks? exposure to a sovereign crisis gets transmitted onto the corporate sector. To do so we use data on the universe of banks and ?rms in Argentina during the crisis of 2001. We build a model characterized by matching frictions in which ?rms establish (long-term) relationships with banks that are subject to balance sheet disruptions. Credit relationships with banks more exposed to the crisis su?er the most. However, this relationship-level e?ect overstates the true cost of the crisis since profitable ?rms (e.g., exporters after a devaluation) might ?nd it optimal to switch lenders, reducing the negative impact on overall credit and activity. Using linked bank-?rm and ?rm-level data we ?nd evidence largely consistent with our theory.
Keywords: Sovereign Default; Devaluation; Bank networks (search for similar items in EconPapers)
JEL-codes: E32 G21 H63 N26 (search for similar items in EconPapers)
Pages: 66 pages
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Journal Article: Relationship Networks in Banking Around a Sovereign Default and Currency Crisis (2020)
Working Paper: Relationship Networks in Banking Around a Sovereign Default and Currency Crisis (2019)
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