The Impact of the Dodd-Frank Act on Small Business PDF Download
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Author: Michael D. Bordo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
There are concerns that the Dodd-Frank Act (DFA) has impeded small business lending. By increasing the fixed regulatory compliance requirements needed to make business loans and operate a bank, the DFA disproportionately reduced the incentives for all banks to make very modest loans and reduced the viability of small banks, whose small-business share of C&I loans is generally much higher than that of larger banks. Despite an economic recovery, the small loan share of C&I loans at large banks and banks with $300 or more million in assets has fallen by 9 percentage points since the DFA was passed in 2010, with the magnitude of the decline twice as large at small banks. Controlling for cyclical effects and bank size, we find that these declines in the small loan share of C&I loans are almost all statistically attributed to the change in regulatory regime. Examining Federal Reserve survey data, we find evidence that the DFA prompted a relative tightening of bank credit standards on C&I loans to small versus large firms, consistent with the DFA inducing a decline in small business lending through loan supply effects. We also empirically model the pace of business formation, finding that it had downshifted around the time when the DFA and the Sarbanes-Oxley Act were announced. Timing patterns suggest that business formation has more recently ticked higher, coinciding with efforts to provide regulatory relief to smaller banks via modifying rules implementing the DFA. The upturn contrasts with the impact of the Sarbanes-Oxley Act, which appears to persistently restrain business formation.
Author: Michael D. Bordo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
There are concerns that the Dodd-Frank Act (DFA) has impeded small business lending. By increasing the fixed regulatory compliance requirements needed to make business loans and operate a bank, the DFA disproportionately reduced the incentives for all banks to make very modest loans and reduced the viability of small banks, whose small-business share of C&I loans is generally much higher than that of larger banks. Despite an economic recovery, the small loan share of C&I loans at large banks and banks with $300 or more million in assets has fallen by 9 percentage points since the DFA was passed in 2010, with the magnitude of the decline twice as large at small banks. Controlling for cyclical effects and bank size, we find that these declines in the small loan share of C&I loans are almost all statistically attributed to the change in regulatory regime. Examining Federal Reserve survey data, we find evidence that the DFA prompted a relative tightening of bank credit standards on C&I loans to small versus large firms, consistent with the DFA inducing a decline in small business lending through loan supply effects. We also empirically model the pace of business formation, finding that it had downshifted around the time when the DFA and the Sarbanes-Oxley Act were announced. Timing patterns suggest that business formation has more recently ticked higher, coinciding with efforts to provide regulatory relief to smaller banks via modifying rules implementing the DFA. The upturn contrasts with the impact of the Sarbanes-Oxley Act, which appears to persistently restrain business formation.
Author: Tahsen Alqatawni
Publisher:
ISBN:
Category :
Languages : en
Pages : 11
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Book Description
The Dodd-Frank Act is single longest bill ever passed by the U.S.... The Dodd-Frank Act passed in reply to the latest financial meltdown, which applies to prevent further fraud and abuse in the markets, also geared toward protecting consumers with regulations like keeping borrowers from abusive lending conditions and mortgage practices by lenders. Dodd-Frank regulatory requirements set too many restrictions on local lenders and appraisers and that the Act created for large banks "too-big-to-fail”. However, the small banks, which do not fit neatly into standardized financial modeling, will face unintended consequences, as increased operations costs, which lead to reduced income and limited potential growth. The Act created enormous difficulties on small banks, which has little to do with the financial crisis.
Author: United States. Congress. House. Committee on Small Business. Subcommittee on Economic Growth, Capital Access, and Tax
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 72
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Author: Michael D. Bordo
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
There are concerns that the Dodd-Frank Act (DFA) has impeded small business lending. By increasing the fixed regulatory compliance requirements needed to make business loans and operate a bank, the DFA disproportionately reduced the incentives for all banks to make very modest loans and reduced the viability of small banks, whose small-business share of C&I loans is generally much higher than that of larger banks. Despite an economic recovery, the small loan share of C&I loans at large banks and banks with $300 or more million in assets has fallen by 9 percentage points since the DFA was passed in 2010, with the magnitude of the decline twice as large at small banks. Controlling for cyclical effects and bank size, we find that these declines in the small loan share of C&I loans are almost all statistically attributed to the change in regulatory regime. Examining Federal Reserve survey data, we find evidence that the DFA prompted a relative tightening of bank credit standards on C&I loans to small versus large firms, consistent with the DFA inducing a decline in small business lending through loan supply effects. We also empirically model the pace of business formation, finding that it had downshifted around the time when the DFA and the Sarbanes-Oxley Act were announced. Timing patterns suggest that business formation has more recently ticked higher, coinciding with efforts to provide regulatory relief to smaller banks via modifying rules implementing the DFA. The upturn contrasts with the impact of the Sarbanes-Oxley Act, which appears to persistently restrain business formation.
Author: United States. Congress. House. Committee on Financial Services. Subcommittee on Financial Institutions and Consumer Credit
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 232
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Author: Zhuo Jian Tang
Publisher: GRIN Verlag
ISBN: 3668267464
Category : Business & Economics
Languages : en
Pages : 68
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Master's Thesis from the year 2015 in the subject Business economics - Investment and Finance, Peking University, language: English, abstract: The impact of financial regulation has critical importance on firm performance and profitability. The aftermath of the Financial Crisis of 2008 saw the biggest regulatory reform in the U.S. financial system since the Great Depression. One of the main causes of the crisis was the excessive risk-taking by large firms because prior financial regulations had loopholes that firms could take advantage of. This reform’s intended purpose is to address and fix those failures in past regulatory oversight. With 398 proposed rules and more than 2,000 pages, the Dodd-Frank Wall Street Financial Reform and Consumer Protection Act signed into law in 2010, tackles many issues and implements many changes to the financial system. For one, it established new government oversight agencies, such as the Consumer Financial Protection Bureau (CFPB) and the Financial Stability Oversight Council (FSOC); it also outlined new capital requirement standards for banks, aimed to strengthen investor protection, increase the transparency of OTC derivatives, and improve the regulation of credit rating agencies. Our paper provides empirical evidence on whether the Dodd-Frank Act has any significant impact on the performance of U.S.-listed commercial and savings institutions while controlling for bank size. With a sample size of 640 publicly listed commercial and savings banks in the U.S. over each quarter between 2005-2014, we investigate the impact of the Dodd-Frank Act, bank-specific characteristics, and macroeconomic indicators on banks’ net interest margin, return on assets, and return on equity using a ‘difference-in-differences’ approach. Our results indicate that the Dodd-Frank Act has a significant negative impact on bank performance, indicated by the net interest margin. Return on assets and return on equity show no significant difference between small banks and big banks. More importantly the interaction term, between the Big Bank dummy and the Dodd-Frank dummy, negatively correlates with bank performance for net interest margin, return on assets, and return on equity. Furthermore, we find that bank-specific characteristics explain a substantial portion of bank performance. The contribution of our work is that, to the best of our knowledge, our paper is the first to provide empirical evidence on the impact of the Dodd-Frank on US-listed commercial and savings banks performance using the most recent data for our analysis.
Author: U.s. Government Accountability Office
Publisher: Createspace Independent Publishing Platform
ISBN: 9781974183784
Category :
Languages : en
Pages : 88
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Book Description
" The Dodd-Frank Act includes numerous reforms to strengthen oversight of financial services firms and consolidate certain consumer protection responsibilities within CFPB. To help minimize its regulatory burden on small institutions, including community banks and credit unions, the act exempts such institutions from several of its provisions. However, the act also contains provisions that impose additional requirements on small institutions. Although no commonly accepted definition of a community bank exists, the term often is associated with smaller banks. Historically, community banks and credit unions have played an important role in providing credit to small businesses and other local customers. This report examines (1) the significant changes community banks and credit unions have undergone in the past decade and the factors that have contributed to such changes, and (2) Dodd-Frank Act provisions that regulators, industry associations, and others expect to impact community banks and credit unions, including their small business lending. GAO analyzed regulatory and other data on community banks and credit unions; reviewed academic and other relevant studies; and interviewed federal regulators, community banks, credit unions, state regulatory and industry associations, academics, and others. "
Author: United States. Congress. House. Committee on Financial Services
Publisher:
ISBN:
Category : Financial institutions
Languages : en
Pages : 170
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Book Description
Author: Rongpeng Yang
Publisher:
ISBN:
Category : Political planning
Languages : en
Pages : 76
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Book Description
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law as a policy response to the worst financial crisis since the Great Depression. With Dodd-Frank becoming the law, for the past seven years, numerous rules have been made in accordance to the statutory texts of the Act. Given the uniform applicable nature of many rules made following Dodd-Frank, many have realized that for smaller financial institutions, tightened regulations may have negative unintended consequences. This paper investigates the impact of Dodd-Frank on the performance of small- and medium-size banks, using a bank-level panel data from 2006 to 2016. It is anticipated the passage of Dodd-Frank has negatively impacted the performances of smaller banks.
Author: Nicole Tode
Publisher: GRIN Verlag
ISBN: 3656293791
Category : Business & Economics
Languages : en
Pages : 10
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Book Description
Seminar paper from the year 2010 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, San Diego State University, language: English, abstract: 1. Bank of America presentation and major activities, 2. Choice of four factors and explanation, 3. Possible impacts on Bank of America due to the regulatory changes, 4. References.
