The Impact of G-Sib Identification on Bank Lending: Evidence from Syndicated Loans

61 Pages Posted: 8 Oct 2020

See all articles by Markus Behn

Markus Behn

European Central Bank (ECB)

Alexander Schramm

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October, 2020

Abstract

This paper uses granular data on syndicated loans to analyse the impact of international reforms for Global Systemically Important Banks (G-SIBs) on bank lending behaviour. Using a difference-in-differences estimation strategy, we find no effect of the reforms on overall credit supply, while at the same time documenting a substantial decline in borrower- and loan-specific risk factors for the affected banks. Moreover, we detect a significant decline in the pricing gap between interest rates charged by G-SIBs and other banks, which we interpret as indirect evidence for a reduction in funding cost subsidies. Overall, our results suggest that the G-SIB reforms have helped to mitigate moral hazard problems associated with systemically important banks, while the consequences for the real economy have been limited.

Keywords: bank lending, bank regulation, systemically important banks

JEL Classification: G20, G21, G28

Suggested Citation

Behn, Markus and Schramm, Alexander, The Impact of G-Sib Identification on Bank Lending: Evidence from Syndicated Loans (October, 2020). ECB Working Paper No. 20202479, Available at SSRN: https://ssrn.com/abstract=3706907

Markus Behn (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Alexander Schramm

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

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