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From Financial Crisis to Great Recession: The Role of Globalized Banks

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  • Shekhar Aiyar

Abstract

This paper provides evidence of the role of globalized banks in transmitting financial stresses to the real economy during the global financial crisis. A novel dataset is constructed from quarterly balance sheet reports provided by all UK-resident banks to the Bank of England. I find that the shock to bank funding from non-resident creditors was transmitted domestically through a significant reduction in bank credit supply. Resident subsidiaries and branches of foreign-owned banks reduced lending by a larger amount than domestically-owned banks, while the latter calibrated the reduction in domestic lending more closely to the size of the funding shock.

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  • Shekhar Aiyar, 2012. "From Financial Crisis to Great Recession: The Role of Globalized Banks," American Economic Review, American Economic Association, vol. 102(3), pages 225-230, May.
    • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:225-30
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.3.225
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    References listed on IDEAS

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