Bank regulations and loan contracts

Magalhaes, Rômulo; Tribo Gine, José Antonio

Publication:
Bank regulations and loan contracts

dc.affiliation.dpto	UC3M. Departamento de Economía de la Empresa	es
dc.contributor.author	Magalhaes, Rômulo
dc.contributor.author	Tribo Gine, José Antonio
dc.date.accessioned	2012-05-16T13:35:43Z
dc.date.available	2012-05-16T13:35:43Z
dc.date.issued	2011-10-15
dc.description.abstract	This study examines empirically how bank regulations adopted in lender countries influence the characteristics of loan contracts, using a sample of 46,453 loans made by 278 large commercial banks around 39 countries, to borrowers in 83 countries, in the period from 1998 to 2006. Our findings indicate that the stringency of capital regulations have an inverse U-shaped relationship with priced risk characteristics (spread and maturity) of loan contracts. In addition, more powerful official supervision is associated with riskier loan contracts. Both official supervisory power and private monitoring work as substitutes to capital regulation to reduce the (priced) risk measures of loan contracts when capital stringency is low. For higher capital stringency, supervision and private monitoring complement capital regulation in reducing loan contracts risk measures. Finally, we found that a country’s degrees of legal enforcement and bank industry competition complement capital and private monitoring regulations to improve risk characteristics of loan contracts. The evidence highlights the importance of how bank lending practices are affected by bank regulations and their interactions with themselves and other institutional country factors.
dc.description.sponsorship	The authors wish to thank the financial support of the Ministerio de Ciencia y Tecnologia from Spain (grant # SEJ2006-09401).
dc.format.mimetype	application/pdf
dc.identifier.bibliographicCitation	SSRN working papers series, oct. 15, 2011
dc.identifier.doi	10.2139/ssrn.1343845
dc.identifier.uri	https://hdl.handle.net/10016/14291
dc.language.iso	eng
dc.publisher	SSRN
dc.relation.ispartofseries	SSRN working papers series
dc.relation.publisherversion	http://dx.doi.org/10.2139/ssrn.1343845
dc.rights	Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRights	open access
dc.rights.uri	http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.eciencia	Empresa
dc.subject.other	Banks
dc.subject.other	Regulation
dc.subject.other	Credit
dc.subject.other	Risk
dc.subject.other	Bank lending
dc.subject.other	Syndicated loans
dc.title	Bank regulations and loan contracts
dc.type	working paper	*
dc.type.hasVersion	SMUR	*
dspace.entity.type	Publication