Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession / Nicola Cetorelli, Linda S. Goldberg.

Format:

Book

Author/Creator:

Cetorelli, Nicola.

Contributor:

National Bureau of Economic Research.

Goldberg, Linda S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17873.

NBER working paper series no. w17873

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

Foreign banks pulled significant funding from their U.S. branches during the Great Recession. We estimate that the average-sized branch experienced a 12 percent net internal fund "withdrawal," with the fund transfer disproportionately bigger for larger branches. This internal shock to the balance sheets of U.S. branches of foreign banks had sizable effects on their lending. On average, for each dollar of funds transferred internally to the parent, branches decreased lending supply by about 40 to 50 cents. However, the extent of the lending effects was very different across branches, depending on their pre-crisis modes of operation in the United States.

Notes:

Print version record

February 2012.