Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/21490
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dc.contributor.authorGopalakrishnan, Balagopal
dc.contributor.authorJacob, Joshy
dc.contributor.authorMohapatra, Sanket
dc.date.accessioned2019-04-06T03:33:32Z
dc.date.available2019-04-06T03:33:32Z
dc.date.issued2018
dc.identifier.urihttp://hdl.handle.net/11718/21490
dc.description.abstractThis paper examines the impact of risk-sensitive Basel regulations on access to debt and cost of debt for firms with varying characteristics around the world, and investigates how firms cope through reliance on alternative financing sources and adjustments to their capital investments. We find that the implementation of Basel II regulations had a significant impact on the credit availability for firms. The results indicate that debt financing has become more difficult for the lower-rated firms in the post-Basel II period. Firms mitigate the shortage in bank credit induced by the regulation through a combination of higher trade credit, lower payouts, and reduced capital investments. In particular, lower-rated firms substitute reduced bank credit with increased reliance on accounts payables. Such firms also lower their payouts to shareholders, in an effort to maintain their liquidity. We also find that the lower-rated firms experience a significant decline in their capital investment in the post-Basel II period, implying an active response to the deterioration in access to credit. Our key results are robust to alternative estimations that control for changes in credit demand and credit supply shocks, and inclusion of bank-specific variables obtained from loan-level information. The findings of the paper substantially contribute to the understanding of the real effects of risk-sensitive bank capital regulations.en_US
dc.publisherIndian Institute of Management Ahmedabaden_US
dc.subjectRisk-sensitive Basel regulationsen_US
dc.subjectRisk-sensitive bank capitalen_US
dc.subjectPost-Basel II perioden_US
dc.titleRisk-sensitive Basel regulations and firms' access to credit: direct and indirect effectsen_US
dc.typeWorking Paperen_US
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