Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession

Nicola Cetorelli and Linda Goldberg

No 17873, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Foreign banks pulled significant funding from their U.S. branches during the Great Recession. We estimate that the average-sized branch experienced a 12 percent net internal fund "withdrawal," with the fund transfer disproportionately bigger for larger branches. This internal shock to the balance sheets of U.S. branches of foreign banks had sizable effects on their lending. On average, for each dollar of funds transferred internally to the parent, branches decreased lending supply by about 40 to 50 cents. However, the extent of the lending effects was very different across branches, depending on their pre-crisis modes of operation in the United States.

JEL-codes: E44 F36 G32 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-ban, nep-mac and nep-mon
Note: IFM
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Citations: View citations in EconPapers (115)

Published as Nicola Cetorelli & Linda S. Goldberg, 2012. "Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession," American Economic Review, American Economic Association, vol. 102(3), pages 213-18, May.

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Journal Article: Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession (2012)
Working Paper: Follow the money: quantifying domestic effects of foreign bank shocks in the Great Recession (2012)
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