Differential Bank Behaviors Around the Dodd-Frank Act Size Thresholds
38 Pages Posted: 28 May 2017 Last revised: 6 Oct 2017
Date Written: October 4, 2017
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: Suggested Citation