Financial Intermediation under External Shocks Evidence from Geopolitical Conflicts, Mental Health Policy, and Real Estate Crisis

Abstract

This dissertation examines how financial intermediation responds and adapts to external shocks across three distinct contexts. In Chapter 1, a geopolitical conflict shock, the 2014 Russian sanctions on EU’s agricultural sector, serves as a natural experiment to study global bank lending behavior amid economic sanctions. Using syndicated loan data, we find that foreign banks significantly increased lending to EU agricultural firms hit by the Russian import embargo. These banks, particularly those from countries where EU exporters sought new markets, provide more loans to the sanctioned sector. Chapter 2 turns to a positive public health policy intervention: the 21st Century Cures Act aimed at improving mental health resources in underserved areas in the US. Through a difference-in-differences analysis on bank and county-level data, we show that underserved counties see better mental health resources and loan access. The policy also stimulates local economic conditions, such as more entrepreneurship, employment, and deposits. Chapter 3 explores a financial regulatory shock in China’s real estate market. Exploiting the 2020 “Three Red Lines” policy as an exogenous stress, I document that non-real-estate f irms holding investment properties react to the property downturn by engaging in earnings management and shifting away from short-term bank loans toward bond financing while still exhibiting stronger demand for liquidity-supportive bank credit. Together, these essays underscore a broader theme: financial intermediaries play critical roles in propagating, amplifying, or buffering the effects of external shocks. By integrating evidence from international conflict, health policy, and real estate downturns, the dissertation advances our understanding of the adaptive mechanisms of financial intermediation under stress and offers insights into strengthening financial system resilience in the face of diverse shocks.

Date of Award	20 Jan 2026
Original language	English
Awarding Institution	University of Bristol
Supervisor	Klaus Schaeck (Supervisor) & Min Park (Supervisor)