title: Geopolitical Risk and Global Banking
abstract: How do banks respond to geopolitical risk, and is this response distinct from other macroeconomic risks?Using U.S. supervisory data and new geopolitical risk indices, we show that banks reduce cross-border lending to countries with elevated geopolitical risk but continue lending to those markets through foreign affiliates-unlike their response to other macro risks.Furthermore, banks reduce domestic lending when geopolitical risk rises abroad, especially when they operate foreign affiliates.A sim
journal: Working paper series