Deli, YotaYotaDeliDelis, Manthos D.Manthos D.DelisHasan, IftekharIftekharHasanLiu, LiulingLiulingLiu2019-04-112019-04-112019 Elsev2019-04Journal of Banking & Finance0378-4266http://hdl.handle.net/10197/9909We show that borrowing firms benefit substantially from important enforcement actions issued on U.S. banks for safety and soundness reasons. Using hand-collected data on such actions from the main three U.S. regulators and syndicated loan deals over the years 1997–2014, we find that enforcement actions decrease the total cost of borrowing by approximately 22 basis points (or $4.6 million interest for the average loan). We attribute our finding to a competition-reputation effect that works over and above the lower risk of punished banks post-enforcement and survives in a number of sensitivity tests. We also find that this effect persists for approximately four years post-enforcement.enThis is the author’s version of a work that was accepted for publication in Journal of Banking & Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Banking & Finance (VOL 101, (April 2019)) https://doi.org/10.1016/j.jbankfin.2019.01.016Bank supervisionEnforcement actionsSyndicated loansLoan pricingE44; E51; G21; G28Journal Article10114716010.1016/j.jbankfin.2019.01.0162019-02-11https://creativecommons.org/licenses/by-nc-nd/3.0/ie/