Violent Conflict and Cross-Border Lending - Mikhail Mamonov

Speaker: Mikhail Mamonov, Toulouse Business School

Location: online or at Kiel Institute for the World Economy, Chausseestraße 111, 10115 Berlin

Organizers: Kiel Institute for the World Economy, CEPR

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Abstract:

How do violent conflicts shape cross-border lending? Using syndicated loan data on 14,021 creditors and 97,169 firms across 179 countries, we document a dual response. Relative to domestic creditors, foreign lenders reduce overall lending by 27% (supply-driven) but increase lending to military-related sectors by 24% (demand-driven). This reallocation is concentrated among lenders with military-sector expertise but limited country specialization, and flows toward politically non-aligned conflict zones. Pre-conflict exposure to cross-border lenders is associated with divergent firm-level outcomes: military firms expand assets, revenues, and employment, while exposed civilian firms contract. Violent conflicts thus selectively redirect, rather than uniformly suppress, cross-border credit.