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Mikhail Mamonov
- 9 July 2025
- WORKING PAPER SERIES - No. 3073Details
- Abstract
- How do violent conflicts shape cross-border lending? Using data on syndicated loans by 14,021 creditors to firms in 179 countries (1989–2020), we document a dual effect: foreign banks reduce overall lending relative to domestic banks but significantly increase financing to military and dual-use sectors during conflicts. This reallocation is stronger among lenders less specialized in the conflict country, more specialized in military lending, and domiciled in politically non-aligned nations. Effects are geographically contained and temporally limited, dissipating post-conflict. Our findings reveal how global banks strategically redirect credit toward military sectors during armed conflicts, despite reducing overall country exposure.
- JEL Code
- D74 : Microeconomics→Analysis of Collective Decision-Making→Conflict, Conflict Resolution, Alliances
F34 : International Economics→International Finance→International Lending and Debt Problems
F40 : International Economics→Macroeconomic Aspects of International Trade and Finance→General
G15 : Financial Economics→General Financial Markets→International Financial Markets
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages