Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212361 
Year of Publication: 
2016
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 23/2016
Publisher: 
Bank of Finland, Helsinki
Abstract: 
Formal enforcement actions issued against banks for violations of laws and regulations related to safety and soundness can theoretically have both positive and negative effects on the terms of lending. Using hand-collected data on such enforcement actions issued against U.S. banks, we show that they have a strong negative effect on price terms (loan spreads and fees) for corporate loans and a positive one on non-price terms (loan maturity, size, covenants, and collateral). The results also indicate that in the absence of enforcement actions, the cost of borrowing during the subprime crisis would have been much higher, while punished banks intensify use of collateral.
JEL: 
E44
E51
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-121-4
Document Type: 
Working Paper

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