Global Banking and Macroeconomic Stability: Liquidity, Control, and Monitoring

Seminar summary

We study how the organizational structure of global banks shapes their impact on macroeconomic stability. We develop a two-country dynamic general equilibrium model in which global banks can exert control over the loan monitoring activities of local affiliates and allocate liquidity across their conglomerates. We show that global banks with a centralized business model (loan officers hired centrally by parents and deep internal capital markets) help stabilize the host economy following financial shocks but can amplify the effects of real shocks. The model predictions are consistent with the behaviour of a large panel of global bank parents and affiliates.

How to attend this seminar

This seminar will take place online on Wednesday 1 May 2024 at 2pm.

The seminar is free to attend and we ask that you to please contact Dr Anna Sarkisyan for the zoom link.

Speaker bio

Dr Qingqing Cao

Qingqing Cao is an assistant professor in the Department of Economics at Michigan State University. She earned a Ph.D. from Princeton University in 2015. Her research specializes in macroeconomics and international finance. Among other topics, her work has studied banks’ information production; multinational banking; and the effect of financial friction and intermediation on firms’ innovation and entry. She has published in Journal of the European Economic Association, Journal of Monetary Economics, Review of Economic Dynamics, and Journal of Economic Dynamics and Control.