Does Regulation Only Bite the Less Profitable? Evidence from the Too-Big-To-Fail Reforms

GSIB Status and Corporate Lending

“…To make this point, we primarily rely on the way in which GSIB regulation was phased in. Banks could not have anticipated the exact methodology for determining GSIB-surcharges ahead of our event date, the sample of GSIBs on which surcharges were ultimately imposed is not equivalent to our sample, and the first GSIB designation significantly pre-dates any documented activity to respond to GSIB-specific capital requirements (Goel et al, 2022).…”