The limits of hegemony: U.S. banks and Chilean firms in the Cold War

Felipe Aldunate, Felipe González*, Mounu Prem

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Governments in hegemonic states use economic sanctions to induce changes in other countries. What happens to international business networks when these sanctions are in place? We use new historical firm-level data to document the destruction of financial relations between U.S. banks and Chilean firms after socialist Salvador Allende took office in 1970. Business reports and stock prices suggest that firms were mostly unaffected by having fewer links with U.S. banks. Substitution of financial relations towards domestic banks appears to be the key mechanism explaining these findings.

Original languageEnglish
Article number103212
JournalJournal of Development Economics
StatePublished - Jan 2024

Bibliographical note

Publisher Copyright:
© 2023 Elsevier B.V.


  • Banks
  • Cold War
  • Firms
  • Salvador Allende
  • United States


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