Journal article
Recessions and recoveries: Multinational banks in the business cycle
Journal of monetary economics, v 117, pp 203-219
Jan 2021
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
•We study impact of multinational banks on the dynamics, depth and duration of business cycles.•After banking shocks, multinational banks moderate depth of recessions but slow down recoveries.•We calibrate the model to Polish data and quantify the effects.•The model predictions are broadly consistent with evidence from a large panel of countries.
How does the expansion of multinational banks influence the business cycle of host countries? We study an economy where multinational banks can transfer liquidity across borders through internal capital markets but are hindered in their allocation of liquidity by limited knowledge of local firms’ assets. We find that, following domestic banking shocks, multinational banks moderate the depth of the contraction but slow down the recovery. A calibration to Polish data suggests that multinational banks reduce the average depth of recessions by about 5% but increase their duration by 10%. The predictions are broadly consistent with evidence from a large panel of countries.
Metrics
Details
- Title
- Recessions and recoveries: Multinational banks in the business cycle
- Creators
- Qingqing Cao - Michigan State UniversityRaoul Minetti - Michigan State UniversityMaría Pía Olivero - Drexel UniversityGiacomo Romanini - Michigan State University
- Publication Details
- Journal of monetary economics, v 117, pp 203-219
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000618732000011
- Scopus ID
- 2-s2.0-85078189494
- Other Identifier
- 991019170972704721
UN Sustainable Development Goals (SDGs)
This publication has contributed to the advancement of the following goals:
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics