The pass-through of bank capital requirements to corporate lending spreads

We study the impact of higher bank capital requirements on corporate lending spreads using granular bank- and loan-level data. Our empirical strategy employs heterogeneity in across banks time implementation Switzerland. find that changes deviation from regulatory minimum affect asymmetrically. In response to a reduction deviation, with deficits respect their risk-weighted requirement raise relative surpluses de-leverage. Banks respond by raising and, for deficit banks, cutting lending.