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The real effects of banking supervision: evidence from enforcement actions

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

Authors

Piotr Danisewicz

Danny McGowan

Enrico Onali

Klaus Schaeck



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.

Journal Article Type Article
Publication Date 2018-07
Journal Journal of Financial Intermediation
Print ISSN 1042-9573
Electronic ISSN 1042-9573
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 35
Issue A
Pages 86-101
APA6 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. doi:10.1016/j.jfi.2016.10.003
DOI https://doi.org/10.1016/j.jfi.2016.10.003
Keywords Macro-financial linkages; Real effects; Economic growth;Supervision; Enforcement actions
Publisher URL https://www.sciencedirect.com/science/article/pii/S104295731630050X
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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