Differential Bank Behaviors Around the Dodd-Frank Act Size Thresholds

38 Pages Posted: 28 May 2017 Last revised: 6 Oct 2017

See all articles by Christa H. S. Bouwman

Christa H. S. Bouwman

Texas A&M University; Wharton Financial Institutions Center

Shuting (Sophia) Hu

Baylor University - Department of Finance, Insurance & Real Estate

Shane A. Johnson

Texas A&M University - Department of Finance

Date Written: October 4, 2017

Abstract

The Dodd-Frank Act created differential regulatory requirements for banks above specified asset size thresholds. Event study results imply greater expected net regulatory costs for above-threshold banks. Consistent with hypotheses that near-below-threshold banks alter their behavior to attempt to avoid or delay the regulatory costs and/or to ensure growth that they do experience is highly beneficial, we find that near-below-threshold banks grow assets, risk-weighted assets, and total loans more slowly, and charge higher rates on commercial loans. The results suggest that the Dodd-Frank Act created costs that near-below-threshold banks attempt to avoid by altering their behaviors in economically important ways.

Keywords: Dodd-Frank Act, bank stress tests, regulatory disclosure, bank size, lending, credit availability, loan pricing, bank equity capital ratios

JEL Classification: G18, G21, G28

Suggested Citation

Bouwman, Christa H. S. and Hu, Shuting and Johnson, Shane A., Differential Bank Behaviors Around the Dodd-Frank Act Size Thresholds (October 4, 2017). Available at SSRN: https://ssrn.com/abstract=2974235 or http://dx.doi.org/10.2139/ssrn.2974235

Christa H. S. Bouwman (Contact Author)

Texas A&M University ( email )

360H Wehner
College Station, TX 77843-4218
United States
979-845-3514 (Phone)
979-845-3514 (Fax)

HOME PAGE: http://people.tamu.edu/~cbouwman/

Wharton Financial Institutions Center

2306 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
United States

Shuting Hu

Baylor University - Department of Finance, Insurance & Real Estate ( email )

P.O. Box 98004
Waco, TX 76798-8004
United States

Shane A. Johnson

Texas A&M University - Department of Finance ( email )

Mays School of Business
College Station, TX 77843-4218
United States
979-862-3318 (Phone)

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