Financing Growth: The Impact of Financial Regulation

Financing Growth report cover
Thursday, June 16, 2016 - 8:00am

Executive Summary

More than three-quarters of American companies of all sizes report that the cumulative effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other financial regulatory rules adopted over the past six years is making it harder for them to access the financial services they need. This is true among small, midsized, and even large companies and is felt most acutely in a lack of access to services helping them manage day-to-day liquidity.

This matters because the financial needs of businesses are as diverse as the American economy. Companies work to ensure that they have affordable access to a variety of suppliers for the financial products they need. One of the unintended consequences of the regulatory efforts to reduce risk in the financial system is that many service providers have decided to walk away from providing some products and markets.

Without a robust financial services supply chain, our nation cannot finance adequate economic growth. Regulatory efforts to ensure financial stability must be accompanied by equally vigorous, data-driven analysis to make certain that Main Street companies continue to have access to the financial services they need.

The U.S. Chamber of Commerce surveyed more than 300 corporate finance professionals about their core financial services needs and the indirect regulatory impact of all the newly adopted financial regulations. We asked them about the products they use and the types of financial services they rely on. We also asked them if and how they are seeing the impact from financial regulation on businesses and their customers.


State of Corporate Finance

  • Businesses are simultaneously relying on multiple financial services providers for a diverse range of critical services.
  • Businesses are increasingly looking for a diverse financial services system to meet the growing complexity of their investments and operational financing needs.

Cash Crunch: Access to Capital Is the Top Financial Concern for U.S. Businesses

  • Managing cash flow and liquidity is the biggest financial concern for companies, and companies believe current and pending regulations will make those operations more challenging.
  • One in three companies is taking unanticipated steps in response to regulations and economic changes.
  • Companies are concerned about accessing credit, managing day-to-day currency risk, and raising short term capital. All are necessary functions to manage cash flow, liquidity, and fund future expansion and growth.

Regulatory Impact

  • Nearly four in every five businesses say that financial industry regulation has directly affected their financing activities.
  • This is no longer just a corporate issue, as businesses are increasingly being forced to pass the impact of financial regulations on to customers and employees.
  • Increased bank capital charges are viewed as the primary source of increased costs.
  • One-third of companies expect the regulatory effect to worsen in the next three years.

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