VGSF - WU Vienna - LC

Paul Pelzl, Tinbergen Institute and Vrije Universiteit Amsterdam

Campus WU D4.4.008 11:00 - 12:15

Organizer WU Vienna

The Fin­ance Brown Bag Sem­inar is held by the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance (WU Vi­enna) and the Vi­enna Gradu­ate School of Fin­ance (VGSF). It serves as a present­a­tion plat­form for PhD stu­dents, fac­ulty mem­bers, and vis­it­ors. An over­view of BBS on the web­site of the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance.

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Decem­ber 12th, 2018, 11:00-12:15, D4.4.008

Paul Pelzl, Tin­ber­gen In­sti­tute and Vrije Uni­versiteit Am­s­ter­dam

Title: "Cap­ital Reg­u­la­tions and Credit Line Man­age­ment dur­ing Crisis Times"

Ab­stract

Credit line draw­downs by firms re­duce a bank's reg­u­lat­ory cap­ital ra­tio. Us­ing the Aus­trian Credit Re­gister we provide novel evid­ence that dur­ing the 2008-09 fin­an­cial crisis, banks with a dis­tressed cap­ital pos­i­tion man­aged this con­cern by sub­stan­tially cut­ting little-used credit lines. Con­trolling for a bank's cap­ital pos­i­tion, we also find that greater li­quid­ity prob­lems in­duced banks to con­sid­er­ably cut little-used credit lines over 2008-09. These res­ults sug­gest that banks act­ively man­age both cap­ital and li­quid­ity risk caused by un­drawn credit lines in peri­ods of fin­an­cial dis­tress, but thereby re­duce li­quid­ity pro­vi­sion to firms ex­actly when they need it most.



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