Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/233028 
Year of Publication: 
2021
Citation: 
[Journal:] Review of Financial Studies [ISSN:] 1465-7368 [Volume:] 34 [Issue:] 5 [Publisher:] Oxford University Press [Place:] Oxford [Year:] 2021 [Pages:] 2181-2235
Publisher: 
Oxford University Press, Oxford
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 is associated with important adverse effects during the 2008 crisis: loans funded by nonbanks with fragile liabilities are less likely to be rolled over and experience greater price volatility.
Subjects: 
Financial Crises
Banks
Micro Finance
Non-bank Financial Institutions
Institutional Investors
Government Policy and Regulation
JEL: 
G01
G21
G23
G28
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version
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