To ask or not to ask? Bank capital requirements and loan collateralization

We exploit the 2011 EBA Capital exercise, a quasi-natural experiment that required number of banks to increase their regulatory capital. This makes secured lending for affected more attractive vis-à-vis unsecured lending, because loans require less Using loan-level data covering universe bank in Portugal, we identify how collateral on new when facing higher capital requirements: relative control group, treated be collateralized often after shock. find partially shield relationship borrowers. The increased collateralization also has economically relevant real effects. Treated reallocate funds towards sectors with greater asset tangibility. Firms and borrowing degree from exhibit lower growth tilt investments tangible assets.