scholarly journals Small Business Lending and Regulation for Small Banks

2021 ◽  
Author(s):  
Abhishek Srivastav ◽  
Francesco Vallascas
Keyword(s):  
Small Business ◽  
Local Economy ◽  
Bank Holding Companies ◽  
Regulatory Capital ◽  
Difference In Differences ◽  
Small Business Lending ◽  
Holding Companies ◽  
Positive Effects ◽  
Policy Objectives ◽  
Small Banks

Since May 2015 several U.S. Bank Holding Companies (BHCs) have been newly classified as small banks by regulators, thus benefiting from a friendlier regulatory capital environment. Using a difference-in-differences setting, we show that less regulation on small BHCs boosts small business lending of the affiliated commercial banks. We employ various tests to demonstrate that these findings are attributable to a capital channel where increases in lending are driven by the preferential capital treatment granted to the small BHC. The regulatory capital relief also has some positive effects for the local economy. Overall, the effects of the regulatory capital relief for small BHCs are consistent with its desired policy objectives. This paper was accepted by Tomasz Piskorski, finance.

scholarly journals Have Stress Tests Impacted Small-Business Lending?

2019 ◽  
pp. 1-6
Author(s):  
Yuliya Demyanyk
Keyword(s):  
Small Business ◽  
Federal Reserve ◽  
Small Businesses ◽  
Banking System ◽  
Economic Conditions ◽  
Bank Holding Companies ◽  
Stress Tests ◽  
Small Business Lending ◽  
Holding Companies ◽  
The Impact

The Federal Reserve conducts stress tests of the largest bank holding companies to ensure that the banking system has sufficient capital to stay financially sound in the event of worsening economic conditions. Some groups have raised concerns that the stress tests will reduce lending to small businesses. This article describes recent research investigating the impact of the stress tests on small-business lending. It finds that the banks that are most affected by stress tests have reduced their small-business credit, but aggregate credit to small businesses has not fallen.

Cookie Cutter vs. Character: The Micro Structure of Small Business Lending by Large and Small Banks

2004 ◽  
Vol 39 (2) ◽  
pp. 227-251 ◽  
Author(s):  
Rebel A. Cole ◽  
Lawrence G. Goldberg ◽  
Lawrence J. White
Keyword(s):  
Small Business ◽  
Decision Process ◽  
Small Businesses ◽  
Financial Statements ◽  
Micro Structure ◽  
Small Business Lending ◽  
Micro Level ◽  
Small Banks ◽  
Loan Approval ◽  
Interesting Area

AbstractThe informational opacity of small businesses makes them an interesting area for the study of banks' lending practices and procedures. We use data from a survey of small businesses to analyze the micro level differences in the loan approval processes of large and small banks. We provide evidence that large banks ($1 billion or more in assets) employ standard criteria obtained from financial statements in the loan decision process, whereas small banks rely to a greater extent on information about the character of the borrower. These cookie-cutter and character approaches are compatible with the incentives and environments facing large and small banks.

How important are small banks to small business lending?

1999 ◽  
Vol 23 (2-4) ◽  
pp. 427-458 ◽  
Author(s):  
Jith Jayaratne ◽  
John Wolken
Keyword(s):  
Small Business ◽  
Small Business Lending ◽  
Small Banks

scholarly journals A Gap in Regulation and the Looser Lending Standards that Followed

2014 ◽  
pp. 1-4
Author(s):  
Yuliya Demyanyk ◽  
Elena Loutskina
Keyword(s):  
Financial Crisis ◽  
Shadow Banking ◽  
Bank Holding Companies ◽  
Regulatory Capital ◽  
Holding Companies ◽  
Banking Regulations ◽  
Lending Standards ◽  
New Research ◽  
Loan Losses

New research highlights how disparities in the regulatory treatment of banks and shadow banking organizations before the financial crisis allowed heavily-regulated bank holding companies to lend through their less-regulated subsidiaries. Doing so helped them to conserve their regulatory capital, avoid recognizing costly loan losses, and pursue riskier lending while still adhering to banking regulations.

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