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International bank lending and corporate debt structure

Author

Listed:
  • José María Serena Garralda
  • Serafeim Tsoukas

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.

Suggested Citation

  • José María Serena Garralda & Serafeim Tsoukas, 2020. "International bank lending and corporate debt structure," BIS Working Papers 857, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:857
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    2. Ryan Banerjee & José-María Serena, 2021. "Dampening the financial accelerator? direct lenders and monetary policy," Working Papers 2201, Banco de España.
    3. Chen, Steven Shu-Hsiu, 2024. "Volatility feedback and dealership position: Evidence from the CDS Index, Corporate Bonds, and Government Bonds," Finance Research Letters, Elsevier, vol. 69(PB).
    4. Beck, Thorsten & Peltonen, Tuomas & Perotti, Enrico & Sánchez Serrano, Antonio & Suarez, Javier, 2023. "Corporate credit and leverage in the EU: recent evolution, main drivers and financial stability implications," Report of the Advisory Scientific Committee 14, European Systemic Risk Board.
    5. Das, Kuntal K. & Donald, Logan J. & Guender, Alfred V., 2023. "Debt finance and economic activity in the euro-area: evidence on asymmetric and maturity effects," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 448-472.
    6. Elliott, David & Meisenzahl, Ralf R. & Peydró, José-Luis, 2024. "Nonbank lenders as global shock absorbers: Evidence from US monetary policy spillovers," Journal of International Economics, Elsevier, vol. 149(C).

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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