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Size‐conditioned mandatory capital adequacy disclosure and bank intermediation
Author(s) -
Zelenyuk Natalya,
Faff Robert,
Pathan Shams
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12536
Subject(s) - intermediation , regression discontinuity design , business , market liquidity , capital adequacy ratio , bank regulation , capital requirement , financial system , financial intermediary , accounting , balance sheet , monetary economics , economics , finance , incentive , microeconomics , medicine , profit (economics) , pathology
We add to the literature on the real effects of macroprudential regulation by investigating the novel link between a mandatory capital adequacy disclosure and bank intermediation. The mandatory disclosure stems from the Federal Reserve regulation change of 2013 and leads to identification of bank intermediation effects with treatment methods. A combined empirical strategy of difference‐in‐differences and regression discontinuity design point to economically significant evidence for the reduction of both lending and on‐balance sheet liquidity creation, for banks that disclose their capital adequacy as prescribed by the regulation.