International Bank Lending and Corporate Debt Structure

57 Pages Posted: 17 Apr 2020

See all articles by José María Serena

José María Serena

Bank for International Settlements (BIS)

Serafeim Tsoukas

University of Glasgow - Adam Smith Business School

Date Written: April 15, 2020

Abstract

Using a cross-country sample of bank-dependent public firms we study the international spillovers of a change in banking regulation on corporate borrowing. For identification we examine how US firms' liabilities vis-à-vis banks, non-bank lenders and bond markets evolve after an increase in capital requirements implemented by the European Banking Authority (EBA) in 2011. We find that US firms experience a reduction in credit lines but not in term loans from EU banks. In addition, US firms are able to compensate for the reduction in credit lines from EU banks by securing liquidity facilities from US non-bank financial institutions, without increasing borrowing from corporate bond markets. These results suggest that diversified domestic loan markets, with both banks and non-bank financial institutions providing loans to corporations, can help overcome cuts in cross-border bank funding.

Keywords: credit lines, term loans, bank capital requirements, firm-level data, non-bank financial intermediaries

JEL Classification: G21, G32, F32, F34

Suggested Citation

Serena, Jose Maria and Tsoukas, Serafeim, International Bank Lending and Corporate Debt Structure (April 15, 2020). BIS Working Paper No. 857, Available at SSRN: https://ssrn.com/abstract=3576887

Jose Maria Serena (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Serafeim Tsoukas

University of Glasgow - Adam Smith Business School ( email )

Glasgow, Scotland
United Kingdom

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