Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession

Nicola Cetorelli, Linda S. Goldberg

NBER Working Paper No. 17873
Issued in February 2012
NBER Program(s):   IFM

Foreign banks pulled significant funding from their U.S. branches during the Great Recession. We estimate that the average-sized branch experienced a 12 percent net internal fund "withdrawal," with the fund transfer disproportionately bigger for larger branches. This internal shock to the balance sheets of U.S. branches of foreign banks had sizable effects on their lending. On average, for each dollar of funds transferred internally to the parent, branches decreased lending supply by about 40 to 50 cents. However, the extent of the lending effects was very different across branches, depending on their pre-crisis modes of operation in the United States.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17873

Published: Nicola Cetorelli & Linda S. Goldberg, 2012. "Follow the Money: Quantifying Domestic Effects of Foreign Bank Shocks in the Great Recession," American Economic Review, American Economic Association, vol. 102(3), pages 213-18, May. citation courtesy of

Users who downloaded this paper also downloaded these:
Cetorelli and Goldberg w17355 Liquidity management of U.S. global banks: Internal capital markets in the great recession
Cetorelli and Goldberg w15974 Global Banks and International Shock Transmission: Evidence from the Crisis
Cetorelli and Goldberg w14101 Banking Globalization, Monetary Transmission, and the Lending Channel
Obstfeld w17877 Does the Current Account Still Matter?
Gabaix w17783 Boundedly Rational Dynamic Programming: Some Preliminary Results
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us