#TencentMeeting：514-261-826 Shock Transmission through Global Banking: Evidence from the United States
Dr. Liang Fu
Abstract of the presentation:
How do economic disturbances propagate across borders through international banking? Using detailed data on U.S. banks’ exposures to foreign countries, we first examine how developments in foreign countries impact U.S. banks. Then we look at how shocks to foreign countries affect the U.S. real economy through U.S. banks’ international exposures. Exploiting the within-bank geographic concentration of foreign exposures, we employ the novel granular instrumental variable (GIV) methodology newly developed by Gabaix and Koijen (2024) for identification. We find that shocks originating in foreign countries significantly impact domestic lending of U.S. banks and employment of U.S. counties.
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