International bank lending and corporate debt structure

José María Serena Garralda and Serafeim Tsoukas

No 857, BIS Working Papers from Bank for International Settlements

Abstract: Using a cross-country sample of bank-dependent public firms we study the international spillovers of a change in banking regulation on corporate borrowing. For identification we examine how US firms' liabilities vis-à-vis banks, non-bank lenders and bond markets evolve after an increase in capital requirements implemented by the European Banking Authority (EBA) in 2011. We find that US firms experience a reduction in credit lines but not in term loans from EU banks. In addition, US firms are able to compensate for the reduction in credit lines from EU banks by securing liquidity facilities from US non-bank financial institutions, without increasing borrowing from corporate bond markets. These results suggest that diversified domestic loan markets, with both banks and non-bank financial institutions providing loans to corporations, can help overcome cuts in cross-border bank funding.

Keywords: credit lines; term loans; bank capital requirements; firm-level data; non-bank financial intermediaries (search for similar items in EconPapers)
JEL-codes: F32 F34 G21 G32 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2020-04
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-eec and nep-rmg
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Working Paper: International bank lending and corporate debt structure (2020)
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