Uncertainty in banking regulation may impose widespread economic costs by increasing financial constraints on credit availability. Four years of Dodd‐Frank uncertainty over undecided risk weightings increased regulatory uncertainty for smaller banks, restricting “vanilla” interest rate hedging activities. This paper uses newly reported mortgage banking data as an identification strategy and finds that when costs of uncertainty are removed, small banks hedge 97%–120% more interest rate risk while mortgage securitization income increases by 65.2% compared to large banks. These findings support the need for tailored regulations that consider the higher costs of regulatory uncertainty for smaller banks.

中文翻译：

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不确定性的不成比例成本：小银行对冲和多德-弗兰克（Dodd-Frank）

银行监管的不确定性可能会通过增加对信贷可用性的金融约束而造成广泛的经济成本。未定风险权重的四年多德-弗兰克不确定性增加了小型银行的监管不确定性，限制了“原始”利率对冲活动。本文使用最新报告的抵押银行数据作为识别策略，发现除去不确定性成本后，与大型银行相比，小型银行对冲了97％–120％的利率风险，而抵押证券化收入则增长了65.2％。这些发现支持需要量身定制的法规，这些法规考虑了较小银行监管不确定性的较高成本。