From Financial Crisis to Great Recession: The Role of Globalized Banks
American Economic Review
vol. 102,
no. 3, May 2012
(pp. 225-30)
Abstract
This paper provides evidence of the role of globalized banks in transmitting financial stresses to the real economy during the global financial crisis. A novel dataset is constructed from quarterly balance sheet reports provided by all UK-resident banks to the Bank of England. I find that the shock to bank funding from non-resident creditors was transmitted domestically through a significant reduction in bank credit supply. Resident subsidiaries and branches of foreign-owned banks reduced lending by a larger amount than domestically-owned banks, while the latter calibrated the reduction in domestic lending more closely to the size of the funding shock.Citation
Aiyar, Shekhar. 2012. "From Financial Crisis to Great Recession: The Role of Globalized Banks." American Economic Review, 102 (3): 225-30. DOI: 10.1257/aer.102.3.225JEL Classification
- E44 Financial Markets and the Macroeconomy
- G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- F23 Multinational Firms; International Business
- F44 International Business Cycles
- G01 Financial Crises