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23 juli 2013 Onderzoek Toezichtlabel Working Papers

We study the international transmission of shocks from the banking to the real sector during the global financial crisis. For identification, we use matched bank-firm level data, including many small and medium-sized firms, in Eastern Europe and Central Asia. We find that internationally-borrowing domestic and foreign-owned banks contract their credit more during the crisis than domestic banks that are funded only locally. Firms that are dependent on credit and at the same time have a relationship with an internationally-borrowing domestic or a foreign bank (as compared to a locally-funded domestic bank) suffer more in their financing and real performance. Single-bank-relationship firms, small firms and firms with intangible assets suffer most. For credit-independent firms, there are no  differential effects. Our  findings suggest  that financial globalization has  intensified the international transmission of financial shocks with substantial real consequences.
Keywords: international transmission, firm real effects, foreign banks, international wholesale funding, credit shock.
JEL: G01, G21, F23, F36.

Working paper no. 385

385 - Shocks Abroad, Pain at Home? Bank-Firm Level Evidence on the International Transmission of Financial Shocks



  • Steven Ongena
  • Jose Luis Peydro
  • Neeltje van Horen