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Bank capital requirements, loan guarantees and firm performance

Mayordomo, Sergio; Moreno, Antonio; Ongena, Steven; Rodriguez-Moreno, Maria (2021). Bank capital requirements, loan guarantees and firm performance. Journal of Financial Intermediation, 45:100825.

Abstract

This paper studies the effects of the bank capital requirements imposed by the European authorities in October 2011 on loan collateral and personal guarantees usage to enhance capital ratios. We use detailed information on the loan contracts granted by a representative Spanish bank and several subsidiaries to nonfinancial corporations around that date. We document that personal guarantees usage increases more than that of collateral, especially at subsidiaries with lower capital ratios. However, although the former type of guarantees demonstrably disciplined firms in their risk-taking before 2011, their subsequent overuse may have blunted their impact and may have even undermined firm performance and investment.

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Finance
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Finance
Social Sciences & Humanities > Economics and Econometrics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 January 2021
Deposited On:04 Dec 2020 09:32
Last Modified:24 Oct 2024 01:37
Publisher:Elsevier
ISSN:1042-9573
OA Status:Green
Free access at:Related URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.1016/j.jfi.2019.05.002
Official URL:https://www.sciencedirect.com/science/article/abs/pii/S1042957319300336
Related URLs:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2731833 (Organisation)
Other Identification Number:merlin-id:17808
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