Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216799
Authors: 
Irani, Rustom
Iyer, Rajkamal
Peydró, José-Luis
Meisenzahl, Ralf
Year of Publication: 
2020
Series/Report no.: 
Economic Working Paper Series 1652
Abstract: 
We investigate the connections between bank capital regulation and the prevalence of lightly regulated nonbanks (shadow banks) in the U.S. corporate loan market. For identification, we exploit a supervisory credit register of syndicated loans, loan-time fixed-effects, and shocks to capital requirements arising from surprise features of the U.S. implementation of Basel III. We find that less-capitalized banks reduce loan retention, particularly among loans with higher capital requirements and at times when capital is scarce, and nonbanks step in. This reallocation has important spillovers: during the 2008 crisis, loans funded by nonbanks with fragile liabilities are less likely to be rolled over and experience greater price volatility.
Subjects: 
shadow banks
risk-based capital regulation
Basel III
intercations between banks and nonbanks
trading by banks
non-performing loans
JEL: 
G01
G21
G23
G28
Document Type: 
Working Paper

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