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The Effects of Sanctions on Russian Banks in TARGET2 Transactions Data

Author

Listed:
  • Drott, Constantin
  • Goldbach, Stefan
  • Nitsch, Volker
Abstract
This paper examines the effect of financial sanctions at the most disaggregated level possible, individual bank accounts. Using data from the Eurosystem’s real-time gross settlement system TARGET2, we provide empirical evidence that sanctions imposed by the European Union on Russian banks following Russia’s aggression against Ukraine in 2014 and 2022 have sizably reduced financial transactions with sanctioned Russian bank accounts, both along the extensive and intensive margins. Among the various sanction measures taken, exclusion from SWIFT, a global provider of secure financial messaging services, turns out to have the largest effects.

Suggested Citation

  • Drott, Constantin & Goldbach, Stefan & Nitsch, Volker, 2024. "The Effects of Sanctions on Russian Banks in TARGET2 Transactions Data," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 142468, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:142468
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/142468/
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    References listed on IDEAS

    as
    1. Besedeš, Tibor & Goldbach, Stefan & Nitsch, Volker, 2021. "Cheap talk? Financial sanctions and non-financial firms," European Economic Review, Elsevier, vol. 134(C).
    2. Matthieu Crozet & Julian Hinz, 2020. "Friendly fire: the trade impact of the Russia sanctions and counter-sanctions," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(101), pages 97-146.
    3. Ahn, Daniel P. & Ludema, Rodney D., 2020. "The sword and the shield: The economics of targeted sanctions," European Economic Review, Elsevier, vol. 130(C).
    4. Tibor Besedeš & Stefan Goldbach & Volker Nitsch, 2017. "You’re banned! The effect of sanctions on German cross-border financial flows," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 32(90), pages 263-318.
    5. Joakim Gullstrand, 2020. "What goes around comes around: The effects of sanctions on Swedish firms in the wake of the Ukraine crisis," The World Economy, Wiley Blackwell, vol. 43(9), pages 2315-2342, September.
    6. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    7. Anna Miromanova, 2023. "Quantifying the trade‐reducing effect of embargoes: Firm‐level evidence from Russia," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 1121-1160, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Tibor Besedeš & Stefan Goldbach & Volker Nitsch, 2024. "Smart or smash? The effect of financial sanctions on trade in goods and services," Review of International Economics, Wiley Blackwell, vol. 32(1), pages 223-251, February.
    2. Mikhail Mamonov & Anna Pestova & Steven Ongena, 2023. "'Crime and Punishment'? How Banks Anticipate and Propagate Global Financial Sanctions," Swiss Finance Institute Research Paper Series 23-59, Swiss Finance Institute.
    3. Devasmita Jena & C. Akash & Prachi Gupta, 2024. "Deflecting economic sanctions: do trade and political alliances matter?," International Economics and Economic Policy, Springer, vol. 21(3), pages 543-567, July.

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    More about this item

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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