Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/304397 
Year of Publication: 
2024
Series/Report no.: 
BOFIT Discussion Papers No. 10/2024
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
We study how terminated correspondent banking relationships affect international trade. Drawing on firm-level export data from emerging Europe, we show that when local banks lose access to correspondent services, their corporate clients experience significant export declines. This trade contraction occurs on both the extensive margin, with fewer firms exporting, and the intensive margin, with existing exporters shipping lower values. Firms only partially offset lost exports with higher domestic sales, resulting in lower total revenues and employment. Other firms cease operations entirely. These firmlevel impacts aggregate to lower industry-level exports in countries more exposed to correspondent bank retrenchment.
Subjects: 
Correspondent banking
trade finance
de-risking
global banks
international trade
anti-money laundering
JEL: 
F14
F15
F36
G21
G28
L14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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