Henri Fraisse

finance seminar

Henri Fraisse

Banque de France
The real effects of bank capital requirements
Joint with
Mathias Lé, David Thesmar
Venue

Château Lafarge

Château Lafarge - Salle de séminaires
Château Lafarge
Route des Milles
13290 Les Milles
Date(s)
Tuesday, May 9 2017| 2:30pm
Contact(s)

Eric Girardin: eric.girardin[at]univ-amu.fr
Christelle Lecourt: christelle.lecourt[at]univ-amu.fr
Jean-François Carpantier: jean-francois.carpantier[at]univ-amu.fr

Abstract

We measure the impact of bank capital requirements on corporate borrowing and investment using loan-level data. The Basel II regulatory framework makes capital requirements vary across both banks and across firms, which allows us to control for time varying firm-level risk and bank-level credit supply shocks. We find that a 1 percentage point increase in capital requirement reduces lending by 9%. Firms can attenuate this reduction by substituting borrowing across banks, but only partially. The resulting reduction in borrowing capacity impacts investment: for firms whose effective capital requirement increases by 1 percentage point, fixed assets are reduced by 2.5%.

More information