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Title:Follow the money: Quantifying domestic effects of foreign bank shocks in the great recession PDF Logo
Authors:Cetorelli, Nicola
Goldberg, Linda S.
Issue Date:2012
Series/Report no.:Staff Report, Federal Reserve Bank of New York 545
Abstract:Foreign banks pulled signifi cant 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 forty to fifty cents. However, the extent of the lending effects was very different across branches, depending on their precrisis modes of operation in the United States.
Subjects:bank
global
liquidity
transmission
capital markets
crisis
branch
JEL:E44
F36
G32
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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