Bertelsmann Stiftung (ed.)

Dr. Kilian Huber, Dr. Dominic Ponattu

Banking Crises, Firms and their International Affiliates in the EU

Policy Paper

  • 2019, 28 pp (PDF)
  • Free of charge

The effects could be sizable: for example, back-of-the-envelope calculations suggest that a banking crisis in the US could lead to an estimated

decrease in sales in the German business economy of about 21 billion euros each year, while a banking crisis in the UK could induce a sales loss of about 13 billion euros in the German business economy. The results suggest that measures to prevent banking crises, for example reductions in political risks (like Brexit) or Eurozone reforms (averting the "diabolical loop"), would significantly reduce cross-country contagion of crises via firms – and this way contribute to a smooth functioning of the real economy in the Single Market.