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International bank lending and corporate debt structure

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  • Jose-Maria Serena
  • 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-`a-vis banks, nonbank 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 reductions in credit lines from EU banks by securing liquidity facilities from US nonbank financial institutions without increasing borrowing from US corporate bond markets. These results suggest that diversified domestic loan markets, in which banks and nonbank financial institutions lend to corporations, can help overcome cuts in cross-border bank funding.

Suggested Citation

  • Jose-Maria Serena & Serafeim Tsoukas, 2020. "International bank lending and corporate debt structure," Working Papers 2020_13, Business School - Economics, University of Glasgow.
    • Handle: RePEc:gla:glaewp:2020_13
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    References listed on IDEAS

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    1. Reint Gropp & Thomas Mosk & Steven Ongena & Carlo Wix, 2019. "Banks Response to Higher Capital Requirements: Evidence from a Quasi-Natural Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 32(1), pages 266-299.
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    4. Ivashina, Victoria & Scharfstein, David, 2010. "Bank lending during the financial crisis of 2008," Journal of Financial Economics, Elsevier, vol. 97(3), pages 319-338, September.
    5. Lins, Karl V. & Servaes, Henri & Tufano, Peter, 2010. "What drives corporate liquidity? An international survey of cash holdings and lines of credit," Journal of Financial Economics, Elsevier, vol. 98(1), pages 160-176, October.
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    Cited by:

    1. 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.
    2. Ryan Banerjee & José-María Serena, 2021. "Dampening the financial accelerator? direct lenders and monetary policy," Working Papers 2201, Banco de España.
    3. 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.

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    More about this item

    Keywords

    Credit lines; term loans; bank capital requirements; firm-level data; non-bank financial intermediaries;
    All these keywords.

    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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