Banking Globalization, Local Lending, and Labor Market Effects: Micro-Level Evidence from Brazil

70 Pages Posted: 15 Jun 2017

See all articles by Felix Noth

Felix Noth

Otto-von-Guericke-Universität Magdeburg; Halle Institute for Economic Research

Matias Ossandon Busch

Center for Latin American Monetary Studies CEMLA; Halle Institute for Economic Research

Date Written: June 14, 2017

Abstract

This paper estimates the effect of a foreign funding shock to banks in Brazil after the collapse of Lehman Brothers in September 2008. Our robust results show that bank-specic shocks to Brazilian parent banks negatively affected lending by their individual branches and trigger real economic consequences in Brazilian municipalities: More affected regions face restrictions in aggregated credit and show weaker labor market performance in the aftermath which documents the transmission mechanism of the global financial crisis to local labor markets in emerging countries. The results represent relevant information for regulators concerned with the real effects of cross-border liquidity shocks.

Keywords: financial crisis, international shock transmission, bank lending, regional labor markets

JEL Classification: E24, E44, G01, G21

Suggested Citation

Noth, Felix and Ossandon Busch, Matias, Banking Globalization, Local Lending, and Labor Market Effects: Micro-Level Evidence from Brazil (June 14, 2017). BOFIT Discussion Paper No. 11/2017, Available at SSRN: https://ssrn.com/abstract=2986798

Felix Noth (Contact Author)

Otto-von-Guericke-Universität Magdeburg ( email )

Universitätspl. 2
PSF 4120
Magdeburg, D-39106
Germany

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
Halle, 06108
Germany

HOME PAGE: http://www.iwh-halle.de/asp/person.asp?fnh&Lang=e&Abteilung=fin

Matias Ossandon Busch

Center for Latin American Monetary Studies CEMLA ( email )

Durango 54, Roma Nte
06700
Mexico

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

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