Evolution of Debt Financing toward Less-Regulated Financial Intermediaries in the United States

Fisher College of Business Working Paper No. 2022-03-004

Charles A. Dice Center Working Paper No. 2022-04

72 Pages Posted: 6 Jul 2022 Last revised: 30 Jan 2024

See all articles by Isil Erel

Isil Erel

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Eduard Inozemtsev

University of Melbourne - Faculty of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 26, 2024

Abstract

Nonbank lenders have been playing an increasing role in supplying debt, especially after the Great Recession. How important are the distortions in the greater regulation of banks that differentially limit risk-taking across alternative providers of credit? How might the growing role of nonbanks in credit markets affect financial stability? This selective review addresses these questions and discusses how banks and nonbanks helped provide liquidity to the nonfinancial sector during the COVID-19 pandemic shock. We argue that tighter bank regulation has created incentives for nonbanks to increase their participation in credit markets, a trend that creates concerns about financial stability.

Keywords: Nonbank, fintech, bank regulation, loan, bond

JEL Classification: G21, G22, G23, G24, G28

Suggested Citation

Erel, Isil and Inozemtsev, Eduard, Evolution of Debt Financing toward Less-Regulated Financial Intermediaries in the United States (January 26, 2024). Fisher College of Business Working Paper No. 2022-03-004, Charles A. Dice Center Working Paper No. 2022-04, Available at SSRN: https://ssrn.com/abstract=4151880 or http://dx.doi.org/10.2139/ssrn.4151880

Isil Erel (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Eduard Inozemtsev

University of Melbourne - Faculty of Business and Economics ( email )

Level 11, 198 Berkeley Street
The University of Melbourne
Melbourne, VIC 3010
Australia

HOME PAGE: http://einozemtsev.com

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
586
Abstract Views
2,096
Rank
84,737
PlumX Metrics