DP15564 GSIB status and corporate lending: An international analysis

Global Systemically Important Banks (GSIBs) benefit from implicit government guarantees but face additional capital requirements and oversight. This paper examines the effectiveness of the Financial Stability Board’s recently introduced GSIB-framework and its short-run implications for the real economy, by exploiting the leak of a partially accurate GSIB list by the Financial Times. We find that GSIB-designation reduces the supply of syndicated loans to risky corporate borrowers by 8%, and that these borrowers experience lower asset-, investment- and sales growth than similar firms borrowing from non-GSIB banks. The results appear to be driven by stricter supervision, not by higher capital surcharges.

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Citation

Degryse, H, M Mariathasan and T Tang (2020), ‘DP15564 GSIB status and corporate lending: An international analysis‘, CEPR Discussion Paper No. 15564. CEPR Press, Paris & London. https://cepr.org/publications/dp15564