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Bank response to higher capital requirements : evidence from a quasi-natural experiment / Reint E. Gropp, Thomas Mosk, Steven Ongena, Carlo Wix
VerfasserGropp, Reint ; Mosk, Thomas ; Ongena, Steven ; Wix, Carlo
ErschienenHalle (Saale), Germany : Halle Institute for Economic Research (IWH), December 2016
Umfang1 Online-Ressource (III, 58 Seiten = 0,75 MB) : Diagramme
SpracheEnglisch
SerieIWH-Diskussionspapiere ; no. 33/2016
URNurn:nbn:de:gbv:3:2-66832 
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Bank response to higher capital requirements [0.75 mb]
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We study the impact of higher capital requirements on banks' balance sheets and its transmission to the real economy. The 2011 EBA capital exercise provides an almost ideal quasi-natural experiment, which allows us to identify the effect of higher capital requirements using a difference-in-differences matching estimator. We find that treated banks increase their capital ratios not by raising their levels of equity, but by reducing their credit supply. We also show that this reduction in credit supply results in lower firm-, investment-, and sales growth for firms which obtain a larger share of their bank credit from the treated banks.