The real effects of banking supervision: Evidence from enforcement actions

Piotr Danisewicz; Danny McGowan; Enrico Onali; Klaus Schaeck

doi:10.1016/j.jfi.2016.10.003

The real effects of banking supervision: Evidence from enforcement actions

Piotr Danisewicz, Danny McGowan, Enrico Onali, Klaus Schaeck^*

^*Corresponding author for this work

Research output: Contribution to journal › Article (Academic Journal) › peer-review

52 Citations (Scopus)

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Abstract

We present a novel way to examine macro-financial linkages by focusing on the real effects of bank supervisors’ enforcement actions. Exploiting plausibly exogenous variation in supervisory monitoring intensity, we show that enforcement actions in single-market banks trigger temporarily large adverse effects for the macroeconomy by reducing personal income growth, the number of establishments, and increasing unemployment. These effects are related to contractions in bank lending and liquidity creation, and are more pronounced when we consider enforcement actions on both single-market and multi-market banks, and in counties with fewer banks and greater external financial dependence.

Original language	English
Pages (from-to)	86-101
Number of pages	16
Journal	Journal of Financial Intermediation
Volume	35
Issue number	A
Early online date	27 Oct 2016
DOIs	https://doi.org/10.1016/j.jfi.2016.10.003
Publication status	Published - 1 Jul 2018

Bibliographical note

Publisher Copyright:
© 2016 Elsevier Inc.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Research Groups and Themes

AF Banking

Keywords

Macro-financial linkages
Real effects
Economic growth
Supervision
Enforcement actions

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Accepted author manuscript, 1.11 MBLicence: CC BY-NC-ND

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title = "The real effects of banking supervision: Evidence from enforcement actions",

abstract = "We present a novel way to examine macro-financial linkages by focusing on the real effects of bank supervisors{\textquoteright} enforcement actions. Exploiting plausibly exogenous variation in supervisory monitoring intensity, we show that enforcement actions in single-market banks trigger temporarily large adverse effects for the macroeconomy by reducing personal income growth, the number of establishments, and increasing unemployment. These effects are related to contractions in bank lending and liquidity creation, and are more pronounced when we consider enforcement actions on both single-market and multi-market banks, and in counties with fewer banks and greater external financial dependence.",

keywords = "Macro-financial linkages, Real effects, Economic growth, Supervision, Enforcement actions",

author = "Piotr Danisewicz and Danny McGowan and Enrico Onali and Klaus Schaeck",

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doi = "10.1016/j.jfi.2016.10.003",

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AU - Danisewicz, Piotr

AU - McGowan, Danny

AU - Onali, Enrico

AU - Schaeck, Klaus

PY - 2018/7/1

Y1 - 2018/7/1

N2 - We present a novel way to examine macro-financial linkages by focusing on the real effects of bank supervisors’ enforcement actions. Exploiting plausibly exogenous variation in supervisory monitoring intensity, we show that enforcement actions in single-market banks trigger temporarily large adverse effects for the macroeconomy by reducing personal income growth, the number of establishments, and increasing unemployment. These effects are related to contractions in bank lending and liquidity creation, and are more pronounced when we consider enforcement actions on both single-market and multi-market banks, and in counties with fewer banks and greater external financial dependence.

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KW - Macro-financial linkages

KW - Real effects

KW - Economic growth

KW - Supervision

KW - Enforcement actions

UR - https://www.scopus.com/pages/publications/85006305764

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DO - 10.1016/j.jfi.2016.10.003

M3 - Article (Academic Journal)

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VL - 35

SP - 86

EP - 101

JO - Journal of Financial Intermediation

JF - Journal of Financial Intermediation

IS - A

ER -

The real effects of banking supervision: Evidence from enforcement actions

Abstract

Bibliographical note

UN SDGs

Research Groups and Themes

Keywords

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