Bank liquidity regulation and the growth of private credit

Sebastian Doerr, Gaston Gelos and Vesa Pursiainen

No 1388, BIS Working Papers from Bank for International Settlements

Abstract: We study the role of bank liquidity regulation in the growth of private credit. Following the introduction of the liquidity coverage ratio (LCR), private credit increases significantly more in U.S. counties with a larger footprint of banks subject to the LCR or of LCR banks with greater initial liquidity shortfalls. Our estimated effect of the LCR on private credit growth is comparable in economic magnitude to that of the increased capital requirements from the 2012 CCAR stress tests. Consistent with loan supply effects, the relationship between banks’ LCR footprint and private credit is stronger in industries that are more reliant on credit.

Keywords: private credit; liquidity regulation; liquidity coverage ratio; nonbank lending (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 (search for similar items in EconPapers)
Date: 2026-10
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1388

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