International bank lending and corporate debt structure

Serena, J.-M. and Tsoukas, S. (2020) International bank lending and corporate debt structure. Working Paper. Bank for International Settlements.

Abstract

Using a cross-country sample of bank-dependent public firms we study the international spillovers of a change in banking regulation on corporate borrowing. For identification we examine how US firms' liabilities vis-à-vis banks, non-bank lenders and bond markets evolve after an increase in capital requirements implemented by the European Banking Authority (EBA) in 2011. We find that US firms experience a reduction in credit lines but not in term loans from EU banks. In addition, US firms are able to compensate for the reduction in credit lines from EU banks by securing liquidity facilities from US non-bank financial institutions, without increasing borrowing from corporate bond markets. These results suggest that diversified domestic loan markets, with both banks and non-bank financial institutions providing loans to corporations, can help overcome cuts in cross-border bank funding.

• Item Type: Research Reports or Papers (Working Paper)
• Status: Published
• Glasgow Author(s) Enlighten ID: Tsoukas, Professor Serafeim
• Authors: Serena, J.-M., and Tsoukas, S.
• Subjects: H Social Sciences > HG Finance
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Publisher: Bank for International Settlements
• Published Online: 15 April 2020