Working Papers
Banking Complexity in the Global Economy, (2025) Journal of International Economics
with Raoul Minetti, Oren Ziv
Presented at Bank of Italy, Federal Deposit Insurance Corporation, Indiana University, Michigan State University, University of Alicante, University of Essex, Luiss University (Rome), University of Michigan, University of Perugia, 2023 SED meeting, 2023 GEN workshop, 2023 NYU-Petralia Applied Economics Workshop, Varna 2023 Workshop in Applied Macroeconomics, 2022 Midwest Macroeconomics Meeting, 2022 Ventotene Macroeconomics Workshop
International lending flows are often intermediated through banking hubs and complex multi-national routing. We develop a dynamic stochastic general equilibrium model where global banks choose the path of direct or indirect lending through partner institutions in multiple countries. We show how conflating locational loan flows with ultimate lending biases results both by attributing ultimate lending to banking hubs, and by missing ultimate lending that occurs indirectly via third countries. We next study the effects of global banking complexity. Indirect lending allows countries to bypass shocked lending routes via alternative countries; however, it dilutes their ability to diversify sources of funds after shocks. The quantitative analysis reveals that banking complexity can exacerbate credit and output instability when countries feature heterogeneous banking efficiency.

Global Financial Chains (draft and data coming soon)
with Raoul Minetti, Oren Ziv
Presented at 2024 Financial Intermediation Workshop Bank of Italy – EIEF, NBER SI 2024, Luiss Business School, 2024 ECB-FRB-FRBNY Global Research Forum on International Macroeconomics and Finance
The use of global financial hubs and tax havens to move capital internationally obfuscates ultimate international investment positions in available data. We provide a partial equilibrium network model of global capital positions where capital can be sent indirectly from origin to destination through one or multiple third countries (chains) in a manner which minimizes transaction costs. The model can be embedded in common classes of international finance general equilibrium models. We use the model to microfound the algorithmic restatement procedure in Coppola, Maggiori, Neiman, and Schreger (2021) and obtain conditions under which the empirical chains of asset holdings recover the ultimate underlying bilateral positions. We then estimate our model relaxing those conditions. We generate an enlarged matrix of bilateral restatements as well as a cost matrix that underpins these holdings. Our findings confirm the role of tax havens in international financial transactions and augment the recharacterization of China’s net positive position. Our results uncover a substantial intermediation role for the United States and the United Kingdom and allows us to identify the ultimate owners of investments ostensibly originating in tax haven countries. The implicit cost matrix we recover exhibits a strong gravity relationship. Our estimation produces four data products: a restated matrix of global capital positions, a matrix of bilateral transfer costs, a matrix of bilateral network transfer costs, and an enlarged version of the IMF Coordinated Portfolio Investment Survey (CPIS).
Does JIT production change the network structure of GVCs? Evidence from Italian firms (draft coming soon)
with Simona Giglioli
Publications
Recessions and Recoveries. Multinational Banks in the Business Cycle (2021), Journal of Monetary Economics
with Qingqing Cao, Raoul Minetti, Maria Pia Olivero
How does the expansion of multinational banks influence the business cycle of host countries? We study an economy where multinational banks can transfer liquidity across borders through internal capital markets but are hindered in their allocation of liquidity by limited knowledge of local firms’ assets. We find that, following domestic banking shocks, multinational banks moderate the depth of the contraction but slow down the recovery. A calibration to Polish data suggests that multinational banks reduce the average depth of recessions by about 5% but increase their duration by 10%. The predictions are broadly consistent with evidence from a large panel of countries.
Discussions
“Trade Intermediation and Resilience in Global Sourcing”, by Perelló
2024 BdI, ECB, WB workshop on “Trade, value chains and financial linkages in the global economy”
“The Ripple Effect: Supply Chain Reconfigurations and Cross-border Credit Dynamics”, by Correa, Fabiani, Ossandon, Sarmiento
2024 10th Annual Banking Research Network Workshop
“A Sufficient Statistics Approach for Endogenous Production Networks: Theory and Evidence from Ukraine’s War”, by Korovkin, Makarin, Miyauchi
2023 BdI, ECB, WB workshop on “Trade, value chains and financial linkages in the global economy”