Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296245 
Year of Publication: 
2024
Series/Report no.: 
ECONtribute Discussion Paper No. 303
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
Bank deregulation in the form of the repeal of the Glass-Steagall Act facilitated the entry of non-bank lenders into the market for syndicated loans during the pre-2008 credit boom. Institutional investors disproportionately purchase tranches of loans originated by universal banks able to cross-sell loans and underwriting services to firms (as permitted by the repeal). A shock to cross-selling intensity increases loan liquidity at origination and over time. The mechanism is that non-loan exposures ensure monitoring even when banks retain small loan shares. Our findings complement the conventional view that regulatory arbitrage caused the rise of non-bank lenders.
Subjects: 
Non-bank lending
bank deregulation
credit supply
loan liquidity
industrial organization of financial markets
JEL: 
G20
G21
G23
G28
Document Type: 
Working Paper

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