Out with the New, in with the Old? Bank Supervision and the Composition of Firm Investment

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Out with the New, in with the Old? Bank Supervision and the Composition of Firm Investment

Using exogenous variation generated by the creation of the Single Supervisory Mechanism (SSM) in the euro area, we find that relative to firms borrowing from banks remaining under national supervision, firms borrowing from SSM-supervised banks reduce intangible assets and increase tangible assets and cash holdings.

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