Effects of Bank Capital Requirements on Lending by Banks and Non-Bank Financial Institutions

52 Pages Posted: 10 Jan 2024 Last revised: 30 Jan 2025

See all articles by Peter Bednarek

Peter Bednarek

Deutsche Bundesbank

Olga Briukhova

University of Zurich - Department of Banking and Finance; Swiss Finance Institute

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Natalja von Westernhagen

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: January 13, 2025

Abstract

What is the impact of a sudden and sizeable increase in bank capital requirements on the lending activity by directly affected banks and by non-affected non-bank financial institutions (NBFIs)? To answer this question, we apply a difference-in-differences methodology around the capital exercise by the European Banking Authority (EBA) in 2011 with German credit register data. We find that insurance companies, financial enterprises, and factoring companies — but not leasing companies or very large NBFIs — and Non-EBA banks expand their corporate lending relative to EBA banks. In particular, NBFIs use the opportunity to expand their credit activities, in riskier and more competitive borrower segments.

Keywords: non-bank financial intermediation, bank capital requirements, EBA capital exercise

JEL Classification: E50, G21, G23, G28, C33

Suggested Citation

Bednarek, Peter and Briukhova, Olga and Ongena, Steven R. G. and von Westernhagen, Natalja, Effects of Bank Capital Requirements on Lending by Banks and Non-Bank Financial Institutions (January 13, 2025). Swiss Finance Institute Research Paper No. 25-12, Available at SSRN: https://ssrn.com/abstract=4689715 or http://dx.doi.org/10.2139/ssrn.4689715

Peter Bednarek

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany
004969 9566-8972 (Phone)

HOME PAGE: http://www.bundesbank.de

Olga Briukhova

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
8032 Zurich
Switzerland
+41446343931 (Phone)

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Steven R. G. Ongena (Contact Author)

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Natalja Von Westernhagen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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