Job Market Paper:

``Crime and Punishment?" How Banks Anticipate and Propagate Global Financial Sanctions," with Anna Pestova and Steven Ongena [Latest version: June 2023] Submitted to a journal 

Abstract:  We study the impact of global financial sanctions on banks and their corporate borrowers in Russia. Financial sanctions were consecutively imposed between 2014 and 2019, allowing targeted (but not yet sanctioned) banks to adapt their international and domestic exposures in advance. Using a staggered difference-in-differences approach with in-advance adaptation to anticipated treatment, we establish that targeted banks immediately reduced their foreign assets and actually expanded their international borrowings, compared to similar other banks. Once sanctioned, however, these banks not only further reduced their foreign assets but also started to decrease their international borrowings as well and faced considerable outflow of domestic private deposits. The introduction of government support prevented the banks' disorderly failures and resulted in credit reshuffling: the banks contracted their lending to the domestic corporate sector by at least 4% of GDP and increased household lending by almost the same magnitude, mostly offsetting the total economic loss. Further, we introduce a two-stage treatment diffusion approach that flexibly addresses potential spillovers of the sanctions to private banks with political connections. Using unique hand-collected board membership and bank location data our approach shows that, throughout this period, politically-connected banks were not all equally recognized as potential sanction targets. Finally, using the syndicated loan data we establish that the negative real effects of sanctions materialized only when sanctioned firms were borrowing from sanctioned banks.



Working Papers:

1) ``Quo Vadis? New Firm-Bank Matching  Following "Sin'' Bank Closures," with Roman Goncharenko, Steven Ongena, Svetlana Popova, and Natalia Turdyeva [Latest version: April 2023]


2) ``The Price of War: Macroeconomic and Cross-Sectional Effects of Sanctions on Russia,”  with Anna Pestova  [Latest version: May 2023]


3) "Disasters and (Bank) Financing," with Anna Pestova and Steven Ongena [March 2024] new!


4) "Bank Credit and the Risk of Recession: The Role of Business Cycle Shocks," with Anna Pestova [Latest version: April 2023]


5) "Bank Cost Efficiency and Credit Market Structure Under a Volatile Exchange Rate," with Artem Prokhorov and Christopher Parmeter [Latest version] R&R at the Journal of Banking and Finance (2nd round)


6) "Credit Supply Shocks and Household Defaults," with Anna Pestova 


7) "Measuring Fraud in Banking and Its Impact on the Economy: A Quasi-Natural Experiment"  


8) "The Real Effects of Credit Supply Shocks: Evidence from an Emerging Economy" [2020] with  Daria Kolesnik, Alexei Kiselev, and Anna Pestova  - Accepted at the Oxford Bulleting of Economics & Statistics


Work in Progress:

1) "Political Extremism, Bank Credit, and Recessions" with Mario Carillo, Raoul Minetti, and Pierluigi Murro 

2) "Striving for Sustainability in Banking: Evidence from Socio-Environmental Guidelines in Brazil" with Hans Degryse, Bernardus van Doornik,  Carola Theunisz, and Maxim Schepers.

3) "Fanning the Flames? Cross-Border Bank Lending during Wars and Conflicts" with Ralph De Haas, Alexander Popov, and Iliriana Shala 

4) "The Great Revenge? How Politicians Punish Firms in Opposition Areas after Elections" with Alexander Popov and Steven Ongena

5) "Potato to the Rescue: Home Production and Child Nutrition during Deep Economic Crises" with Anna Pestova and Ella Sargsyan