Previous Events
16. June 2025, 16:00 until 17:30
Economic Theory & Policy Seminar / J. Guentner (JKU) / Multinational firms and bank lending
Seminar
Jochen Guentner, opens an external URL in a new window (JKU)
“Multinational firms and bank lending”
This paper analyzes the external and internal financing decisions of multinational firms (MNEs) and their role in the transmission of productivity shocks across borders. We extend the costly-state-verification model of Bernanke et al. (1999) to include the internal capital market of an MNE and derive predictions for its optimal external and internal borrowing in response to a change in the productivity of foreign affiliates. Using mandatory-reporting data on bank credit of Austrian MNEs and their FDI relationships with German affiliates for 2007–2022, we test our theoretical predictions empirically. We find that, relative to affiliate total assets, parent firms in Austria extend less internal credit to more productive German affiliates and reduce their own external borrowing from Austrian banks. Consistent with a higher external finance premium, more productive German affiliates reduce their (net) internal liabilities with Austrian parents and increase their external leverage instead.
Event details
- Event location
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TU Wien
1040 Vienna
Wiedner Hauptstr. 8-10, Seminarroom: Sem.R. DA green 04 (Freihaus Building, 4th floor, green area) - Organiser
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ECON
Julia Hutter
julia.hutter@tuwien.ac.at - Public
- Yes
- Entrance fee
- No
- Registration required
- No