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Bank capital (requirements) and credit supply: Evidence from pillar 2 decisions

Olivier De Jonghey (), Hans Dewachter and Steven Ongenax ()
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Olivier De Jonghey: Corresponding author, CentER, European Banking Center, Tilburg University
Steven Ongenax: University of Zurich, SFI, CEPR

Authors registered in the RePEc Author Service: Olivier De Jonghe () and Steven Ongena ()

No 303, Working Paper Research from National Bank of Belgium

Abstract: We analyze how time-varying bank-speci_c capital requirements a_ect banks' balance sheet adjustments as well as bank lending to the non-_nancial corporate sector. To do so, we relate Pillar 2 capital requirements to bank balance sheet data, a fully documented corporate credit register and _rm balance sheet data. Our analysis consists of three components. First, we examine how time-varying bank-speci_c capital requirements a_ect banks' balance sheet composition. Subsequently, we investigate how capital requirements a_ect the supply of bank credit to the corporate sector, both on the intensive and extensive margin, as well as for di_erent types of credit. Finally, we document how bank characteristics, _rm characteristics and the stance of monetary policy impact the relationship between bank capital requirements and credit supply.

Keywords: Capital requirements; credit supply; credit register; bank; regulation (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 L5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-cba and nep-cfn
Date: 2016-10
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:201610-303

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