PhD Defense – Victor OSEI
Victor OSEI will publicly defend his PhD Thesis, entitled “Essays on Bank Lending” on January 28, 2025 at 9.00 Am (Room Salle des Actes, Forum B, Faculty of Law and Economics).
Jury: Pr. Amine TARAZI (University of Limoges), Pr. John WILSON (School of Management, University of St Andrews), Dr. Jaideep OBEROI (SOAS University of London), and Pr. Céline MESLIER (University of Limoges).
Abstract
This thesis investigates the dynamics of bank lending through the lenses of liquidity regulation, sustainability-linked loans (SLLs), and aging demographics. These factors have attracted increased attention due to their growing relevance in contemporary finance and their profound implications for banking lending, financial stability, and economic development. In Chapter 1, we examine the impact of less stringent liquidity regulation on bank lending. Our analysis focuses on European commercial banks across 17 Eurozone countries between 2011 and 2019. We leverage a regulatory change announced by the European Central Bank (ECB) in September 2015, which harmonized the treatment of central bank reserve balances across the Eurozone. Under the new rule, reserve balances became eligible as high-quality liquid assets (HQLA) for Liquidity Coverage Ratio (LCR) purposes. Our findings indicate that banks benefiting from the relaxation of the liquidity regulation increased their lending relative to the control group. The mechanical increase in the LCR for treated banks had a positive effect on lending activities. Chapter 2 explores the impact of the lending relationships in sustainability-linked syndicated loans (SLLs). The issuance of bank loans tied to sustainability objectives surpassed $2.6 trillion in 2023, reflecting the increasing prominence of green and sustainable loan products within global financial markets. Our first key finding is that KPI intensity is negatively associated with various measures of prior lending relationships between the sustainable agent and the borrower. The second finding, which links prior relationships to a broader KPI scope, supports the risk management hypothesis. While KPI intensity is negatively associated with changes in borrower ESG scores, the existence of a prior lending relationship mitigates this effect. Chapter 3 explores the impact of demographic changes, particularly aging population, on bank behavior, focusing specifically on liquidity creation. We observe a negative association between population age and banks’ liquidity creation or maturity transformation.