OeNB Freitagseminar with Jochen Güntner

Multinational firms and bank lending

OeNB Freitagsseminar with Jochen Güntner, Johannes Kepler University Linz

The 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 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.

Date
Friday, 13 June 2025 | Start: 11:00 AM | End: 12:30 PM                      

Venue
The event is planned both, online via Webex and onsite at the Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1090 Vienna, Meeting Room M3080, 3rd floor.

Please register by 12 June 2025, at the latest.