The Real Effects of Bank Capital Requirements

Fraisse, Henri; Lé, Mathias; Thesmar, David

doi:10.2139/ssrn.3723394

Cited by 32 publications

(24 citation statements)

References 8 publications

(16 reference statements)

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“…Specifically, a 1 pp increase in the OCR is associated to a contraction of lending supply of 4.2% (column 1). This result is in line with a large literature suggesting a negative relationship between capital requirements and bank lending (see, amongst others, Behn et al, 2016;Fraisse et al, 2019;Gropp et al, 2019). A negative and statistically significant link is also displayed between MKT FUNDING/TA and the change in bank lending.…”

Section: Loan-level Resultssupporting

confidence: 91%

Caution: Do Not Cross! Capital Buffers and Lending in COVID-19 Times

et al. 2022

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Section: Loan-level Resultssupporting

confidence: 91%

Caution: Do Not Cross! Capital Buffers and Lending in COVID-19 Times

et al. 2022

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“…There is a strand of work that shows that bank shocks matter for loan supply (e.g., Bentolila et al, 2018;Jiménez et al, 2017;Khwaja & Mian, 2008). In the context of the EBA intervention, De Jonghe et al ( 2020), Fraisse et al (2020) and Blattner et al (2021) report a decline in corporate lending. However, financial shocks and capital constraints are transmitted internationally (Cetorelli & Goldberg, 2011;De Haas & Van Horen, 2012Giannetti & Laeven, 2012) and can affect small and medium-sized enterprises' (SMEs) access to bank credit (Ongena et al, 2015;Popov & Udell, 2012).…”

Section: Hypothesesmentioning

confidence: 99%

International bank credit, nonbank lenders, and access to external financing

2022

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Using a cross-country firm-bank dataset, we examine how an unexpected increase in bank capital requirements by the European Banking Authority affects firms' financial choices. We find that the regulatory shock implies a reduction in the supply of bank credit, with US firms affected the most. Yet, US firms can tap into the public bond markets and secure credit lines from nonbank financial institutions. This has implications for their capital structure and their real outcomes. These results suggest that diversified domestic loan markets, in which banks and nonbank financial institutions lend to corporations, can help overcome reductions in cross-border bank funding.

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“…However, there is also the opposite view that increasing capital requirements run the risk of reducing investment and bank lending, which ultimately reduces their profitability (Kashyap and Stein, 2004). Another study on bank capital requirements reveals that higher capital requirements for banks significantly reduces their lending capacity, which in turn has a negative impact on profits (Fraisse et al, 2017).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

The challenges of cybersecurity insurance development: The case of Latvia

Volkova¹,

JEKABSONE²,

LAVRINOVICA³

et al. 2021

JBM

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Purpose. This paper aims to provide an overview of the current challenges of cybersecurity insurance, focusing on the identification of development constraints and opportunities and the key impact factors of this recently emerging insurance market in Latvia. Methodology. The authors used theoretical and empirical research methods, e.g., a literature review, surveys of experts from principal insurance companies and professionals from prominent mobile network operators, and interviews with experts in cybersecurity and pioneers of cybersecurity insurance in Latvia. Findings. The research results illustrate the immense difficulties in providing cyber risk insurance in Latvia. The lack of historical knowledge and evolving nature of cyber risks create significant challenges in quantifying and expressing cyber threats in monetary value. Cyber risk modelling is in its infancy, as events and threat vectors are still evolving. Due to the evolving nature of cyber risks, simulating events and fitting into traditional risk management forms are the primary challenges for insurance companies. Despite the increasing relevance of cyber risks to businesses, research on guidelines and methods of mitigating cyber risks with cyber insurance is still limited. Social implications. Cyber insurance is a direct result of public awareness of cyber threats and preparedness to mitigate business risks. Thus, cyber insurance is an integral part of educating and building a more resilient society. Originality/Value. The authors propose various approaches to cybersecurity insurance development, such as technology awareness building, standardization of mandatory reporting requirements and public–private partnerships in which the government covers part of the risk to overcome insurability limitations. Keywords: cyber insurance, cybersecurity, cyber insurance market, cyber risks

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The Real Effects of Bank Capital Requirements

Cited by 32 publications

References 8 publications

Caution: Do Not Cross! Capital Buffers and Lending in COVID-19 Times

Caution: Do Not Cross! Capital Buffers and Lending in COVID-19 Times

International bank credit, nonbank lenders, and access to external financing

The challenges of cybersecurity insurance development: The case of Latvia

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