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Access to public capital markets and bank lending

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  • Yongqiang Chu
  • Daxuan Zhao

Abstract

We examine how the cost of issuing equity affects bank lending. Using the SEC rule change that allowed exchange‐listed firms with public float less than $75 million to raise equity via shelf registrations as a quasi‐natural experiment, we show that the affected banks increase mortgage lending relative to control banks. Furthermore, the affected banks reduce demand for precautionary capital and become less likely to sell mortgages to third parties.

Suggested Citation

  • Yongqiang Chu & Daxuan Zhao, 2024. "Access to public capital markets and bank lending," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 52(1), pages 184-213, January.
    • Handle: RePEc:bla:reesec:v:52:y:2024:i:1:p:184-213
    DOI: 10.1111/1540-6229.12437
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