EconPapers    
Economics at your fingertips  
 

No Pain, No Gain. Multinational Banks in the Business Cycle

Qingqing Cao, Raoul Minetti and Maria Olivero ()
Additional contact information
Qingqing Cao: Michigan State University

No 2018-6, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: We study the role of multinational banks in the propagation of business cycles in host countries. In our economy, multinational banks can transfer liquidity across borders through internal capital markets. However, their scarce knowledge of local firms' collateral hinders their allocation of liquidity to firms. We find that, through the interaction between the "liquidity origination" advantage and the "liquidity allocation" disadvantage, multinational banks can act as a short-run stabilizer in the immediate aftermath of domestic liquidity shocks but be a drag on the subsequent recovery. Structural and cyclical policies can ameliorate the trade-off induced by the presence of multinational banks effective stabilization tool.

Keywords: Multinational Banks; Macroeconomic Stability; Business Cycle (search for similar items in EconPapers)
JEL-codes: E44 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2018-02-14
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-mac
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://drive.google.com/file/d/1wAEchLVljO_kqX_K1 ... 5/view?usp=drive_web Full text (application/pdf)

Related works:
Working Paper: No Pain, No Gain. Multinational Banks in the Business Cycle (2018) 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:ris:drxlwp:2018_006

Access Statistics for this paper

More papers in School of Economics Working Paper Series from LeBow College of Business, Drexel University Contact information at EDIRC.
Bibliographic data for series maintained by Richard C. Barnett ().

 
Page updated 2021-04-09
Handle: RePEc:ris:drxlwp:2018_006