Template-type: ReDIF-Paper 1.0
Author-Name: Filippo De Marco
Author-Name: Tomasz Wieladek 
Title: The Real Effects of Capital Requirements and Monetary Policy: Evidence from the United Kingdom
Abstract: We study the effects of bank-specific capital requirements on Small and Medium Enterprises (SMEs) in the UK from 1998 to 2006. Following a 1% increase in capital requirements, SMEs’ asset growth contracts by 6.9% in the first year of a new bankfirm relationship, but the effect declines over time. We also compare the effects of capital requirements to those of monetary policy. Monetary policy only affects firms with higher credit risk and those borrowing from small banks, whereas capital requirements affect both. Capital requirement changes, instead, do not affect firms with alternative sources of finance, but monetary policy shocks do.
Classification-JEL: G21, G28, E51 
Keywords: Capital requirements, SME real effects, relationship lending, microprudential and monetary policy
Length: 55 pages 
Number: 1640
Creation-Date: 2016
File-URL: https://repec.unibocconi.it/baffic/baf/papers/cbafwp1640.pdf
File-Format: application/pdf
File-Size: 1171
Handle: RePEc:baf:cbafwp:cbafwp1640