Bank asset transparency and credit supply

Karthik Balakrishnan () and Aytekin Ertan ()
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Karthik Balakrishnan: London Business School
Aytekin Ertan: London Business School

Review of Accounting Studies, 2019, vol. 24, issue 4, No 7, 1359-1391

Abstract: Abstract We employ the European Central Bank’s Loan-level Reporting Initiative as a shock to banks’ asset disclosures. We find that after the disclosure regulation, treatment banks raise more capital at cheaper rates and increase lending. Using novel survey data on small businesses, we also document that, in regimes with heightened bank disclosures, borrowers receive greater funding, conditional on their demand for credit. Furthermore, companies whose relationship banks provide asset disclosures start to borrow and invest more relative to firms from the same country and industry. Collectively, our inferences suggest that asset disclosures alleviate the capital market frictions that banks face and allow them to supply more credit to the real economy.

Keywords: Asset disclosures; Credit supply; Bank regulation; Real effects; SMEs; G21; G28; G32; M41; M48 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11142-019-09510-2

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