Effects of bank capital requirements on lending by banks and non-bank financial institutions

Peter Bednarek, Olga Briukhova, Steven Ongena and Natalja v. Westernhagen

Journal of Financial Intermediation, 2025, vol. 63, issue C

Abstract: What is the impact of a sudden and sizeable increase in bank capital requirements on the lending activity by directly affected banks and by non-affected non-bank financial institutions (NBFIs)? To answer this question, we apply a difference-in-differences methodology around the capital exercise by the European Banking Authority (EBA) in 2011 with German credit register data. We find that insurance companies, financial enterprises, and factoring companies — but not leasing companies or very large NBFIs — and Non-EBA banks expand their corporate lending relative to EBA banks. In particular, NBFIs use the opportunity to expand their credit activities, in riskier and more competitive borrower segments.

Keywords: Non-bank financial intermediation; Bank capital requirements; EBA capital exercise (search for similar items in EconPapers)
JEL-codes: C33 E50 G21 G23 G28 (search for similar items in EconPapers)
Date: 2025
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Related works:
Working Paper: Effects of Bank Capital Requirements on Lending by Banks and Non-Bank Financial Institutions (2025)
Working Paper: Effects of bank capital requirements on lending by banks and non-bank financial institutions (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:63:y:2025:i:c:s104295732500035x

DOI: 10.1016/j.jfi.2025.101167

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