Banks are regulated more than most firms, making them good subjects to study regulatory arbitrage (avoidance). Their latest arbitrage opportunity may be the new leverage rule covering the largest U.S. banks; leverage rules require equal capital against assets with unequal risks, so banks can...

We test whether lenders' screening incentives weaken when faced with the possibility of loan sales. We adopt a new measure of lending standards, mortgage application processing time at the loan level, and use the collapse of the non-agency mortgage-backed securities issuance market as a natural...

Do corporate social responsibility (CSR) metrics accurately reflect firms’ material social impacts? Analyzing small business lending during the Great Recession, we find that banks assessed to be socially responsible exerted higher social costs by actively pulling back funds from those in need...

Scholars and regulators often maintain that extended shareholder liability reduces bank risk-taking. Prior to the Great Depression, double liability on bank shareholders was the predominant institutional framework aimed to constrain moral hazard. We examine whether increased shareholder...

In Japan, bankers affiliated with a firm's lenders can become directors of the borrower to monitor managerial decisions that may harm the creditors. Exploiting this unique institution, we examine the effect of debt-equity conflicts on firms' investment efficiency and find the following results....