The real effects of banking supervision: Evidence from enforcement actions

Danisewicz, Piotr; McGowan, Danny; Onali, Enrico; Schaeck, Klaus

Abstract

© 2016 Elsevier Inc. 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.

Citation

Danisewicz, P., McGowan, D., Onali, E., & Schaeck, K. (2018). The real effects of banking supervision: Evidence from enforcement actions. Journal of Financial Intermediation, 35(A), 86-101. https://doi.org/10.1016/j.jfi.2016.10.003

• Journal Article Type: Article
• Acceptance Date: Oct 21, 2016
• Online Publication Date: Oct 27, 2016
• Publication Date: 2018-07
• Deposit Date: Jun 19, 2018
• Publicly Available Date: Jun 19, 2018
• Journal: Journal of Financial Intermediation
• Print ISSN: 1042-9573
• Electronic ISSN: 1096-0473
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 35
• Issue: A
• Pages: 86-101
• DOI: https://doi.org/10.1016/j.jfi.2016.10.003
• Keywords: Macro-financial linkages; Real effects; Economic growth;Supervision; Enforcement actions
• Public URL: https://nottingham-repository.worktribe.com/output/821213
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S104295731630050X