Procyclical Capital Regulation and Lending
We use a quasi-experimental research design to examine the effect of model-based capital regulation on the procyclicality of bank lending and firms' access to funds. In response to an exogenous shock to credit risk in the German economy, capital charges for loans under model-based regulation in...
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| Veröffentlicht in: | The Journal of finance (New York) 2016-04, Vol.71 (2), p.919-956 |
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| container_end_page | 956 |
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| container_issue | 2 |
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| container_title | The Journal of finance (New York) |
| container_volume | 71 |
| creator | BEHN, MARKUS HASELMANN, RAINER WACHTEL, PAUL |
| description | We use a quasi-experimental research design to examine the effect of model-based capital regulation on the procyclicality of bank lending and firms' access to funds. In response to an exogenous shock to credit risk in the German economy, capital charges for loans under model-based regulation increased by 0.5 percentage points. As a consequence, banks reduced the amount of these loans by 2.1 to 3.9 percentage points more than for loans under the traditional approach with fixed capital charges. We find an even stronger effect when we examine aggregate firm borrowing, suggesting that microprudential capital regulation can have sizeable real effects. |
| doi_str_mv | 10.1111/jofi.12368 |
| format | Article |
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In response to an exogenous shock to credit risk in the German economy, capital charges for loans under model-based regulation increased by 0.5 percentage points. As a consequence, banks reduced the amount of these loans by 2.1 to 3.9 percentage points more than for loans under the traditional approach with fixed capital charges. We find an even stronger effect when we examine aggregate firm borrowing, suggesting that microprudential capital regulation can have sizeable real effects.</description><identifier>ISSN: 0022-1082</identifier><identifier>EISSN: 1540-6261</identifier><identifier>DOI: 10.1111/jofi.12368</identifier><identifier>CODEN: JLFIAN</identifier><language>eng</language><publisher>Cambridge: Blackwell Publishing Ltd</publisher><subject>Bank capital ; Bank loans ; Banking regulation ; Banks ; Basel Accord ; Borrowing ; capital regulation ; Capital requirements ; Commercial regulation ; credit crunch ; Credit risk ; Economic regulation ; financial crisis ; G21 ; G28 ; Germany ; Institutional review boards ; Loans ; procyclicality. 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We find an even stronger effect when we examine aggregate firm borrowing, suggesting that microprudential capital regulation can have sizeable real effects.</description><subject>Bank capital</subject><subject>Bank loans</subject><subject>Banking regulation</subject><subject>Banks</subject><subject>Basel Accord</subject><subject>Borrowing</subject><subject>capital regulation</subject><subject>Capital requirements</subject><subject>Commercial regulation</subject><subject>credit crunch</subject><subject>Credit risk</subject><subject>Economic regulation</subject><subject>financial crisis</subject><subject>G21</subject><subject>G28</subject><subject>Germany</subject><subject>Institutional review boards</subject><subject>Loans</subject><subject>procyclicality. 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JEL classification: G01</topic><topic>Regulation of financial institutions</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>BEHN, MARKUS</creatorcontrib><creatorcontrib>HASELMANN, RAINER</creatorcontrib><creatorcontrib>WACHTEL, PAUL</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>The Journal of finance (New York)</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>BEHN, MARKUS</au><au>HASELMANN, RAINER</au><au>WACHTEL, PAUL</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Procyclical Capital Regulation and Lending</atitle><jtitle>The Journal of finance (New York)</jtitle><addtitle>The Journal of Finance</addtitle><date>2016-04</date><risdate>2016</risdate><volume>71</volume><issue>2</issue><spage>919</spage><epage>956</epage><pages>919-956</pages><issn>0022-1082</issn><eissn>1540-6261</eissn><coden>JLFIAN</coden><abstract>We use a quasi-experimental research design to examine the effect of model-based capital regulation on the procyclicality of bank lending and firms' access to funds. 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| ispartof | The Journal of finance (New York), 2016-04, Vol.71 (2), p.919-956 |
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| language | eng |
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| source | Wiley Online Library Journals Frontfile Complete; Jstor Complete Legacy |
| subjects | Bank capital Bank loans Banking regulation Banks Basel Accord Borrowing capital regulation Capital requirements Commercial regulation credit crunch Credit risk Economic regulation financial crisis G21 G28 Germany Institutional review boards Loans procyclicality. JEL classification: G01 Regulation of financial institutions Studies |
| title | Procyclical Capital Regulation and Lending |
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