Working Papers

1. Banking Complexity in the Global Economy
   with Raoul Minetti, Oren Ziv
   R&R Journal of International Economics [draft]

   ^{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, 2024 EEA annaul conference, 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.

2. 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 Money Macro and Finance Annual Conference (scheduled), 2024 RSA (scheduled) annual conference, 2024 Global Research Forum on International Macroeconomics and Finance (scheduled)}

3. Does JIT production change the network structure of GVCs? Evidence from Italian firms (draft coming soon) with Simona Giglioli

Publications

1. Recessions and Recoveries. Multinational Banks in the Business Cycle ,
   with Qingqing Cao, Raoul Minetti, Maria Pia Olivero
   Journal of Monetary Economics (2021)

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.