Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203304 
Year of Publication: 
2018
Series/Report no.: 
SAFE Working Paper No. 156
Version Description: 
[Date Written: January 22, 2018]
Publisher: 
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe, Frankfurt a. M.
Abstract: 
We study the impact of higher capital requirements on banks' balance sheets and its transmission to the real economy. The 2011 EBA capital exercise is an almost ideal quasi-natural experiment to identify this impact with a difference-in-differences matching estimator. We find that treated banks increase their capital ratios by reducing their risk-weighted assets and - consistent with debt overhang - not by raising their levels of equity. Banks reduce lending to corporate and retail customers, resulting in lower asset-, investment- and sales growth for firms obtaining a larger share of their bank credit from the treated banks.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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