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Small Business Lending and Regulation for Small Banks

Srivastav, A.; Vallascas, F.

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A. Srivastav


Since May 2015 several U.S. Bank Holding Companies (BHCs) have been newly classified as small banks by regulators, thus benefiting from a friendlier regulatory capital environment. Using a difference-in-differences setting, we show that less regulation on small BHCs boosts small business lending of the affiliated commercial banks. We employ various tests to demonstrate that these findings are attributable to a capital channel where increases in lending are driven by the preferential capital treatment granted to the small BHC. The regulatory capital relief also has some positive effects for the local economy. Overall, the effects of the regulatory capital relief for small BHCs are consistent with its desired policy objectives.


Srivastav, A., & Vallascas, F. (2022). Small Business Lending and Regulation for Small Banks. Management Science, 68(10), 7742-7760.

Journal Article Type Article
Acceptance Date Jul 12, 2021
Online Publication Date Dec 15, 2021
Publication Date 2022-10
Deposit Date Jul 19, 2021
Publicly Available Date Jul 19, 2021
Journal Management Science
Print ISSN 0025-1909
Electronic ISSN 1526-5501
Publisher Institute for Operations Research and Management Sciences
Peer Reviewed Peer Reviewed
Volume 68
Issue 10
Pages 7742-7760
Public URL


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