Discussion paper

DP16075 "Crime and Punishment?" How Russian Banks Anticipated and Dealt with Global Financial Sanctions

We study the impact of global financial sanctions on the Russian banks and economy. Financial sanctions were consecutively imposed between 2014 and 2019, allowing potentially-targeted (but not yet sanctioned) banks to adjust their international and domestic exposures. Compared to similar other banks, targeted banks immediately reduced their foreign assets. Yet, to deal with considerable domestic depositor withdrawals, targeted banks at first actually expanded their foreign liabilities. Once sanctioned, however, banks not only further reduced their foreign assets but also started to decrease their foreign liabilities as well. Despite the introduction of government support the sanctioned banks substantially contracted their lending to the domestic corporate sector resulting in a potential loss in domestic GDP of at least four percent. However, at the same time the sanctioned banks increased household lending by almost the same magnitude, mostly offsetting the loss in GDP. Finally, unique hand-collected board membership and location data coupled with a two-stage difference-in-differences approach that flexibly addresses potential treatment diffusion allows us to show that throughout this period state-controlled banks were not all equally recognized as potential sanction targets.


Mamonov, M, A Pestova and S Ongena (2021), ‘DP16075 "Crime and Punishment?" How Russian Banks Anticipated and Dealt with Global Financial Sanctions‘, CEPR Discussion Paper No. 16075. CEPR Press, Paris & London. https://cepr.org/publications/dp16075