Pirates without Borders: The Propagation of Cyberattacks through Firms’ Supply Chains

42 Pages Posted: 31 Jul 2020

See all articles by Matteo Crosignani

Matteo Crosignani

Federal Reserve Banks - Federal Reserve Bank of New York

Marco Macchiavelli

Board of Governors of the Federal Reserve System

André F. Silva

Federal Reserve Board

Date Written: July 2020

Abstract

We document the propagation effects through supply chains of the most damaging cyberattack in history and the important role of banks in mitigating its impact. Customers of directly hit firms saw reductions in revenues, profitability, and trade credit relative to similar firms. The losses were larger for customers with fewer alternative suppliers and suppliers producing high-specificity inputs. Internal liquidity buffers and increased borrowing, mainly through bank credit lines at higher rates due to increased risk, helped affected customers to maintain investment and employment. However, the shock led to persisting adjustments to the supply chain network.

Keywords: cyberattacks, supply chains, credit lines

JEL Classification: E23, G21, G23, L14

Suggested Citation

Crosignani, Matteo and Macchiavelli, Marco and Silva, André F., Pirates without Borders: The Propagation of Cyberattacks through Firms’ Supply Chains (July 2020). FRB of New York Staff Report No. 937, Available at SSRN: https://ssrn.com/abstract=3664772 or http://dx.doi.org/10.2139/ssrn.3664772

Matteo Crosignani (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Marco Macchiavelli

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

André F. Silva

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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