Geopolitical risk, bank lending and real effects on firms - Evidence from the Russian invasion of Ukraine

This paper investigates whether geopolitical risk causes a reduction in bank lending. In particular, it focuses on how the increase in geopolitical risk stemming from the Russian invasion of Ukraine affected euro area bank credit supply. Matching granular supervisory and credit register data and using a panel difference-indifference approach, the results show that banks with larger exposure to the increase in geopolitical risk cut lending significantly more than those with smaller exposure. Banks with greater exposure raised impairments despite

Source: op.europa.eu