by Ryan Niladri Banerjee, Francisco González, José E Gutierrez, José María Serena Garralda<br />This paper examines the credit supply effects of sale-of-business (SoB) bank resolutions under the post-Global Financial Crisis regulatory framework, focusing on the resolution of a major Spanish bank. We provide the first micro-level evidence of how an SoB resolution reshapes credit allocation. The acquiring bank preserved lending relationships, prioritizing support for riskier inherited borrowers most exposed to competing banks’ retrenchment. This stabilization was achieved despite tighter capital conditions, as the acquiring bank strategically reallocated credit within its broader portfolio, shifting away from more capital-intensive exposures.
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