Journal
MANAGEMENT SCIENCE
Volume -, Issue -, Pages -Publisher
INFORMS
DOI: 10.1287/mnsc.2021.4176
Keywords
small banks; regulation; small business lending; local economy
Ask authors/readers for more resources
The study found that reducing regulations on small bank holding companies (BHCs) promotes small business lending by commercial banks, as small BHCs receive preferential capital treatment. The regulatory capital relief also has positive effects on the local economy.
Since May 2015 several U.S. Bank Holding Companies (BHCs) have been newly classified as small banks by regulators, thus benefiting from a friendlier regulatory capital environment. Using a difference-in-differences setting, we show that less regulation on small BHCs boosts small business lending of the affiliated commercial banks. We employ various tests to demonstrate that these findings are attributable to a capital channel where increases in lending are driven by the preferential capital treatment granted to the small BHC. The regulatory capital relief also has some positive effects for the local economy. Overall, the effects of the regulatory capital relief for small BHCs are consistent with its desired policy objectives.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available