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23 juli 2013 Onderzoek

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