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Differential bank behaviors around the Dodd–Frank Act size thresholds

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  • Bouwman, Christa H.S.
  • Hu, Shuting (Sophia)
  • Johnson, Shane A.

Abstract

The Dodd–Frank Act created differential regulatory requirements for banks above specified asset size thresholds. Event study results imply greater expected net regulatory costs for above-threshold banks. Consistent with hypotheses that near-below-threshold banks alter their behavior to attempt to avoid or delay the regulatory costs and/or to ensure growth that they do experience is highly beneficial, we find that near-below-threshold banks grow assets, risk-weighted assets, and total loans more slowly, and charge higher rates on commercial loans. The results suggest that the Dodd–Frank Act created costs that near-below-threshold banks attempt to avoid by altering their behaviors in economically important ways.

Suggested Citation

  • Bouwman, Christa H.S. & Hu, Shuting (Sophia) & Johnson, Shane A., 2018. "Differential bank behaviors around the Dodd–Frank Act size thresholds," Journal of Financial Intermediation, Elsevier, vol. 34(C), pages 47-57.
  • Handle: RePEc:eee:jfinin:v:34:y:2018:i:c:p:47-57
    DOI: 10.1016/j.jfi.2018.01.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Dodd–Frank Act; Bank stress tests; Regulatory disclosure; Bank size; Lending; Credit availability; Loan pricing; Bank equity capital ratios;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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