Evaluating Regulatory Reform: Banks' Cost of Capital and Lending

Anna Kovner and Peter Van Tassel

Journal of Money, Credit and Banking, 2022, vol. 54, issue 5, 1313-1367

Abstract: We examine the effects of regulatory changes on banks' cost of capital and lending. Since the passage of the Dodd–Frank Act, the value‐weighted CAPM cost of capital for banks has averaged 10.5% and declined by more than 4% on a within‐firm basis relative to financial crisis highs. This decrease was much greater for the largest banks subject to new regulation than for other banks and firms. Over a longer 20‐year horizon, we find that changes in the systematic risk of bank equity have real economic consequences: increases in banks' cost of capital are associated with tightening in credit supply and loan rates.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/jmcb.12875

Related works:
Working Paper: Evaluating regulatory reform: banks’ cost of capital and lending (2018)
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:wly:jmoncb:v:54:y:2022:i:5:p:1313-1367

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley Content Delivery ().