Recent regulatory efforts aim at lowering the cyclicality of bank lending because of its potential detrimental effects … on financial stability and the real economy. We investigate the cyclicality of SME lending by local banks with vs … credit demand-side factors. The public mandate is set by local governments and stipulates a deviation from strict profit …

-based capital regulation significantly affected low capitalized banks. The impact depends on a bank's credit risk model, i …This paper examines how Basel III capital reforms affected bank lending in Ger- many. We focus on the increase of ….e. whether a bank applies the standardized approach (SA) or an internal ratings-based approach (IRBA) to determine risk weights …

minimum standard is unlikely to exhibit adverse consequences for credit supply and bank profitability. …

Using detailed data of all German banks, we find that banks which have suffered heavy credit losses reduce their … assumption of constant leverage. Weakly capitalized banks grant fewer new loans than other banks. We control for credit demand … using a new method, the construction of tailored hypothetical bank competitors. …

consistency of own funds requirements with the riskiness of SME. In both the French and the German sample, results suggest that … the relative differences between the capital requirements for large corporates and those for SME (in other words the … capital relief for SME) are lower in the Basel III framework than implied by empirically estimated asset correlations. Results …

combine a credit risk stress test which simulates credit impairments via a CreditMetrics type multi-factor portfolio model … stress, while more than 6% of our sample's credit banks "fail" the stress test, mainly due to their lack of capital. The main … stress drivers prove to be credit impairments rather than other net income components. …

provide much collateral. We document that firms partially offset reduced credit supply by establishing new bank relationships … real economy. We investigate the importance of the bank lending and firm borrowing channel in the international … transmission of bank distress to the real economy - in particular, to real investment and labor employment by nonfinancial firms …

credit offered to firms, and requiring the intermediaries to raise further funds by paying the cost to issue equity. This … are characteristic of the credit crunches observed in the data. …