Reserves Regulation and the Risk-Taking Channel *

Manthos Delis (), Sotirios Kokas () and Alexandros Kontonikas ()
Additional contact information
Manthos Delis: Audencia Business School
Sotirios Kokas: University of Essex
Alexandros Kontonikas: University of Essex

Post-Print from HAL

Abstract: We examine how a policy change by the FDIC, which unexpectedly exempted some banks, affects corporate lending via changes in reserves during the Quantitative Easing (QE) era. To address the endogeneity of reserves, we use a unique hand-collected dataset on the bank's share of exemption from the policy shift, and differentiate between loan demand and loan supply. We find important differences in loan-level outcomes, attributed to the heterogeneous impact of the new regulation on the net return on holding reserves. The effectiveness of the risk-taking channel is significantly weaker for banks with larger exemption shares and this has real effects in terms of borrowers' leverage, growth, and return on assets.

Keywords: FDIC regulation; Bank lending; Quantitative easing; Syndicated loans (search for similar items in EconPapers)
Date: 2024-10-16
New Economics Papers: this item is included in nep-cba and nep-mon
Note: View the original document on HAL open archive server: https://hal.science/hal-04768503v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Corporate Finance, 2024, 89 (102689), ⟨10.1016/j.jcorpfin.2024.102689⟩

Downloads: (external link)
https://hal.science/hal-04768503v1/document (application/pdf)

Related works:
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:hal:journl:hal-04768503

DOI: 10.1016/j.jcorpfin.2024.102689

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().