Working Paper
The Double-Edged Sword of Global Integration: Robustness, Fragility & Contagion in the International Firm Network
Abstract: We estimate global inter-firm networks across all major industries from 1981 through 2016 and provide the first empirical tests for both robust (beneficial) and fragile (harmful) network behavior, relating firms' health with global integration. More connected firms are less likely to be in distress and have higher profit growth and equity returns, but are also more exposed to direct contagion from distressed neighboring firms and network level crises. Our analysis reveals the centrality of finance in the international firm network and increased globalization, with greater potential for crises to spread globally when they do occur.
JEL Classification: C3; F36; F61; G15;
https://doi.org/10.24149/gwp313
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Bibliographic Information
Provider: Federal Reserve Bank of Dallas
Part of Series: Globalization Institute Working Papers
Publication Date: 2017-05-01
Number: 313
Pages: 56 pages