Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212906 
Year of Publication: 
2018
Series/Report no.: 
BOFIT Discussion Papers No. 21/2018
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
This paper exploits the geopolitical conflict in Eastern Ukraine as a negative shock to banking sector and examines the shock transmission. We find that banks with more loans in the conflict areas during the pre-conflict period face a higher level of bad loans in other markets after the shock. This effect is stronger in the regional markets which are closer to the conflict zone. We also find evidence for the "flight to headquarters" effect in post-conflict lending. Specifically, while more affected banks tend to cut their credit supply, the larger contraction is observed in regional markets located farther from headquarters.
JEL: 
G01
G21
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-252-5
Document Type: 
Working Paper

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