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The Multinational Capital Advantage

Author

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  • Sarah Clifford
  • Jakob Miethe

Abstract

This study shows that internal capital markets confer a significant resilience advantage to multinational enterprises (MNEs) during banking crises. First, we document that MNEs experience half the debt contraction of domestic firms during these events. Second, subsidiaries affected by a crisis increase their reliance on intra-group borrowing, offsetting declines in external debt. Third, this ‘multinational capital advantage’ translates into higher post-crisis growth in employment and investment. While this improves the resilience of the host economy to banking crises, the multinational capital advantage may also contribute to the rising market shares of MNEs and increasing firm concentration observed in recent decades.

Suggested Citation

  • Sarah Clifford & Jakob Miethe, 2025. "The Multinational Capital Advantage," CESifo Working Paper Series 12244, CESifo.
    • Handle: RePEc:ces:ceswps:_12244
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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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