Broken Relationships: Derisking by Correspondent Banks and International Trade

Lea Borchert; Ralph De Haas; Karolin Kirschenmann; Alison Schultz

doi:10.1093/rfs/hhag045

Broken Relationships: Derisking by Correspondent Banks and International Trade

Lea Borchert¹; Ralph De Haas²; Karolin Kirschenmann³; Alison Schultz⁴

¹ ZEW, University of Mannheim · ² EBRD, KU Leuven, CEPR · ³ ZEW, Johannes Gutenberg University Mainz · ⁴ Tax Justice Network

Review of Financial Studies 2026 open access

We study how terminated correspondent banking relationships affect international trade. Drawing on firm-level export data from emerging Europe, we show that when local banks lose access to correspondent services, their corporate clients, especially small- and medium-sized enterprises, experience significant export declines. Firms only partially offset lost exports with higher domestic sales, resulting in lower total revenues and employment. Other firms cease operations entirely. These firm-level impacts aggregate to lower product-level exports from countries more exposed to correspondent bank retrenchment.

DOI: 10.1093/rfs/hhag045
Language: en
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