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Do Machine-Readable Disclosures Fuel Nonbank Lending?

Author

Listed:
  • Lin Lu

    (University of Missouri at Columbia, Department of Finance)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

  • Jing Wang

    (University of Missouri at Columbia)

Abstract

We study how reductions in public-information processing costs affect nonbank participation in syndicated loans. Exploiting the SEC's staggered introduction of machinereadable disclosures as an exogenous shock to information-processing costs, we find that lower costs increase nonbank participation but do not affect their likelihood of serving as lead arrangers. The effect is significant only among nonbanks without industry expertise. Reduced processing costs facilitate entry by new nonbanks but not banks. Following the shock, nonbanks rely less on relationship-based signals and more on standard financial metrics. Higher pre-loan automated EDGAR downloads predict greater nonbank participation, consistent with information-processing costs as the mechanism.

Suggested Citation

  • Lin Lu & Steven Ongena & Jing Wang, 2026. "Do Machine-Readable Disclosures Fuel Nonbank Lending?," Swiss Finance Institute Research Paper Series 26-18, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2618
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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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