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"Crime and Punishment"? Anticipation, Diffusion, and Propagation of Global Sanctions

Author

Listed:
  • Mamonov, Mikhail
  • Ongena, Steven
  • Pestova, Anna

Abstract

Global sanctions are increasingly used to limit authoritarian regimes worldwide. Using Russia and its banking industry in 2014-2020 as a laboratory, we fi nd that staggered sanctions announcements produce unintended anticipation effects among targeted but not-yet-sanctioned state-controlled banks by spurring them to increase international borrowings and sell foreign asset holdings before freezing. The uncertainty associated with staggered sanctions also produces diffusion effects on non-targeted private banks with political ties defined through board connections or regional presence. Targeted banks preemptively cut loan supply by at least 20%, but negative real effects occur only when they lend to firms under concurrent sanctions.

Suggested Citation

  • Mamonov, Mikhail & Ongena, Steven & Pestova, Anna, 2021. ""Crime and Punishment"? Anticipation, Diffusion, and Propagation of Global Sanctions," CEPR Discussion Papers 16075, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:16075
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    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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