Bank asset transparency and credit supply

Balakrishnan, K and Ertan, A (2019) Bank asset transparency and credit supply. Review of Accounting Studies, 24 (4). pp. 1359-1391. ISSN 1380-6653

Abstract

We employ the European Central Bank’s Loan-level Reporting Initiative as a shock to banks’ asset disclosures. We find that after the disclosure regulation, treatment banks raise more capital at cheaper rates and increase lending. Using novel survey data on small businesses, we also document that, in regimes with heightened bank disclosures, borrowers receive greater funding, conditional on their demand for credit. Furthermore, companies whose relationship banks provide asset disclosures start to borrow and invest more relative to firms from the same country and industry. Collectively, our inferences suggest that asset disclosures alleviate the capital market frictions that banks face and allow them to supply more credit to the real economy.

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Item Type: Article
Subject Areas: Accounting
Additional Information: © 2019 Springer Nature Switzerland AG. This is a post-peer-review, pre-copyedit version of an article published in Review of Accounting Studies. The final authenticated version is available online at: http://dx.doi.org/10.1007/s11142-019-09510-2
Subjects: C > Commercial banks
A > Assets
Date Deposited: 23 Aug 2019 15:29
Last Modified: 17 Jan 2020 18:00
URI: http://lbsresearch.london.edu/id/eprint/1198
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