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We exploit variation in the timing of bank mergers and acquisitions (M&As) and adopt a difference- in …-differences approach to examine how bank consolidation affects financial policies of corporate borrowers. We find that firms increase … in bank loans. Consistent with the hedging motive for cash holdings à la Acharya et al. (2007), the increase in leverage …
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Over the last years, the capital regulation of banks under the Basel framework has undergone a fundamental review. In parallel to the implementation of Basel III, a non-risk-sensitive leverage ratio and new liquidity standards are introduced. I study the combined impact of the new regime on the...
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' choice between cash and lines of credit as a source of liquidity. I find that customer risk decreases the reliance on bank …
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' choice between cash and credit lines. I show that customer risk decreases the reliance on bank-managed liquidity insurance …
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