Centralised or decentralised banking supervision? Evidence from European banks

Avignone, Giuseppe; Altunbaş, Yener; Polizzi, Salvatore; Reghezza, Alessio

doi:10.1016/j.jimonfin.2020.102264

Cited by 19 publications

(8 citation statements)

References 86 publications

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“…Following the literature on bank regulation and supervision, we use heteroskedasticity robust standards errors clustered at the bank level to allow for residuals to be correlated across times within banks (e.g. Beck et al, 2006;Barth et al, 2013;Avignone et al, 2021). 6…”

Section: Empirical Methodologymentioning

confidence: 99%

“…Although the new regulatory frameworks are internationally agreed upon and centralized bank supervision is gradually emerging (e.g. Avignone et al, 2021), more cross-country evidence is needed to assess whether the bank regulatory regimes work well to promote a well-functioning banking system (Barth et al, 2013). So far, the studies examining national regulations have paid very limited attention to liquidity creation.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Bank regulation, supervision and liquidity creation

Kladakis

Chen

Bellos

2022

Journal of International Money and Finance

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Section: Empirical Methodologymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Bank regulation, supervision and liquidity creation

Kladakis

Chen

Bellos

2022

Journal of International Money and Finance

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“…Empirical literature specifically on the effects of Banking Union is especially scarce. To date, there have been studies of the impact of BU on bank credit risk (Avignone et al 2020), on the equity prices of banks to be subjected to the SSM mechanism (Carboni et al 2017;Sahin and de Haan 2016), on bank and sovereign credit contagion (Sáiz et al 2019), and on the market credibility (Pancotto, 2019), systemic implications (Hüser et al 2017), and public finance aspects (Benczur et al 2017) of the BU's bank resolution regime. As far as we are aware, there are no empirical studies of the impact of BU and the SSM on the risk disclosure practices of European banks.…”

Section: Evidence On the Determinants Of Risk Disclosurementioning

confidence: 99%

“…Previous studies have argued that the effect of the BU in GIPSI countries might be different from the other European countries because of their high levels of sovereign debt (Avignone et al 2020). In order to investigate into this aspect, we analyze if the location of banks in GIPSI countries affect the way the BU has influenced bank disclosure.…”

Section: Robustness Tests and Additional Analysesmentioning

confidence: 99%

European Banking Union and bank risk disclosure: the effects of the Single Supervisory Mechanism

Altunbaş

Polizzi

Scannella

et al. 2021

Rev Quant Finan Acc

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This paper provides evidence on the impact of European Banking Union (BU) and the associated Single Supervisory Mechanism (SSM) on the risk disclosure practices of European banks. The onset of BU and the associated rules are considered as an exogenous shock that provides the setting for a natural experiment to analyze the effects of the new supervisory arrangements on bank risk disclosure practices. A Difference-in-Differences approach is adopted, building evidence from the disclosure practices of systemically important banks supervised by the European Central Bank (ECB) and other banks supervised by national regulators over the period 2012–2017. The main findings are that bank risk disclosure increased overall following BU but there was a weakening of disclosure by SSM-supervised banks relative to banks supervised by national authorities. We also find that the overall positive effect of the BU on bank disclosure is stronger for less profitable banks and in the most troubled economies of the Eurozone (GIPSI countries), while the negative effect on centrally supervised banks is stronger if bank CEOs act also as chairmen (CEO duality). We interpret these findings in light of the fact that the new institutional arrangements for bank supervision under which the ECB relies on local supervisors to collect the information necessary to act gives rise to inefficiencies with respect to the speed and completeness of the information flow between SSM supervised banks and the ECB, which are reflected in bank disclosure practices.

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“…The design of the SSM, with the coexistence of centralised and decentralised supervision, could therefore give rise to potential conflicts of interest. In this regard, NSAs might well be more permissive with banks that are under their supervision and their decisions may be more affected by the economic conditions in their countries [ 9 , 10 ]. Regarding the SRM, the resolution task is also divided between the Single Resolution Board (SRB) and national resolution authorities (NRAs) [ 11 ].…”

Section: Introductionmentioning

confidence: 99%