The Real Effects of Capital Requirements and Monetary Policy: Evidence from the United Kingdom

Tomasz Wieladek and Filippo De Marco

No 11265, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the effects of bank-specific capital requirements on Small and Medium Enterprises (SMEs) in the UK from 1998 to 2006. Following a 1% increase in capital requirements, SMEs’ asset growth contracts by 6.9% in the first year of a new bank-firm relationship, but the effect declines over time. We also compare the effects of capital requirements to those of monetary policy. Monetary policy only affects firms with higher credit risk and those borrowing from small banks, whereas capital requirements affect both. Capital requirement changes, instead, do not affect firms with alternative sources of finance, but monetary policy shocks do.

Keywords: Capital requirements; Firm-level real effects; Smes; Relationship lending; Prudential and monetary policy (search for similar items in EconPapers)
JEL-codes: E51 G21 G28 (search for similar items in EconPapers)
Date: 2016-05
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cba, nep-cfn, nep-ent, nep-fdg, nep-mac, nep-mon and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://cepr.org/publications/DP11265 (application/pdf)

Related works:
Journal Article: The real effects of capital requirements and monetary policy: Evidence from the United Kingdom (2021)
Working Paper: The Real Effects of Capital Requirements and Monetary Policy: Evidence from the United Kingdom (2016)
Working Paper: The real effects of capital requirements and monetary policy: evidence from the United Kingdom (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:11265

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11265

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().