Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/193554
Authors: 
Fraisse, Henri
Lé, Mathias
Thesmar, David
Year of Publication: 
2017
Series/Report no.: 
ESRB Working Paper Series 47
Abstract: 
We measure the impact of bank capital requirements on corporate borrowing and investment using loanE level data. The Basel II regulatory framework makes capital requirements vary across both banks and across firms, which allows us to control for firmE level credit demand shocks and bankE level credit supply shocks. We find that a 1 percentage point increase in capital requirements reduces lending by 10%. Firms can attenuate this reduction by substituting borrowing across banks, but only partially. The resulting reduction in borrowing capacity impacts investment, but not working capital: Fixed assets are reduced by 2.6%, but lending to customers is unaffected.
Subjects: 
Bank capital ratios
Bank regulation
Credit supply
JEL: 
E51
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-92-95081-93-2
Document Type: 
Working Paper
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