Mikhail Mamonov (MGIMO-University and CERGE-EI) - Quo Vadis? Evidence on New Firm-Bank Matching and Firm Performance Following "Sin" Bank Closures

Mikhail Mamonov (MGIMO-University and CERGE-EI) - Quo Vadis? Evidence on New Firm-Bank Matching and Firm Performance Following "Sin" Bank Closures

Co-authors: Roman Goncharenko (KU Leuven), Steven Ongena (University of Zurich), Svetlana Popova (The Central Bank of Russia) and Natalia Turdyeva (The Central Bank of Russia)

Abstract
In 2013, the Central Bank of Russia started revoking licenses from fraudulent banks. By 2020, two-thirds of all operating banks had been shuttered. We analyze this unique period in history with credit register data. Following “sin” bank closure, poorly-performing “bad” firms rush to other (not yet detected) “sin” banks, while “good” firms transfer to “saint” banks. The “bad-sin” coupling more frequently occurs when “sin” is commonly owned or when the local banking market is unconcentrated. Before bank closure, firms remain unaffected; after bank closure, “bad” firms worsen in resiliency and profitability while “good” firms strengthen.

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