Pirates without Borders: The Propagation of Cyberattacks through Firms’ Supply Chains
Abstract: We document the propagation eﬀects through supply chains of the most damaging cyberattack in history and the important role of banks in mitigating its impact. Customers of directly hit ﬁrms saw reductions in revenues, proﬁtability, and trade credit relative to similar ﬁrms. The losses were larger for customers with fewer alternative suppliers and suppliers producing high-speciﬁcity inputs. Internal liquidity buﬀers and increased borrowing, mainly through bank credit lines at higher rates due to increased risk, helped aﬀected customers to maintain investment and employment. However, the shock led to persisting adjustments to the supply chain network.
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Provider: Federal Reserve Bank of New York
Part of Series: Staff Reports
Publication Date: 2020-07-01