Too-Big-To-Lend? Size-Conditioned Mandatory Capital Adequacy Disclosure and Bank Intermediation

We add to the literature on the real effects of macroprudential regulation by investigating the novel link between a mandatory capital adequacy disclosure and bank intermediation. The mandatory disclosure stems from the Federal Reserve regulation change of 2013 and leads to identification of bank intermediation effects with treatment methods. A combined empirical strategy of difference-in-differences and regression discontinuity design point to economically significant evidence for the reduction of both lending growth and deposit growth for banks, that disclose their capital adequacy as prescribed by the regulation. This fall in growth is complemented by employment effects.