TY - JOUR

T1 - Don’t stand so close to me: the role of supervisory style in banking stability

AU - Carretta, Alessandro

AU - Farina, Vincenzo

AU - Fiordelisi, Franco

AU - Paola, Schwizer

AU - Stentella Lopes, Francesco

PY - 2015/3

Y1 - 2015/3

N2 - With the establishment of an integrated Banking Union, the harmonization of supervisory styles (regulation being equal) plays a central role. Our paper addresses a central question: what supervisory culture has been demonstrated to be most effective at ensuring the stability of European banks? We identify six different supervisory cultures and observe to what extent the words used in public speeches by the deans of the national supervision authority reflect the national cultural values of the Hofstede framework (Hofstede et al., 2010). By analyzing a panel of banks operating in the EU-15 from 1999 and 2011, our paper provides empirical evidence that supervisory culture influences the stability of banks. Our results have important policy implications: our paper is the first to provide empirical evidence of heterogeneity in the supervision styles in Europe and its effect on banking stability.

AB - With the establishment of an integrated Banking Union, the harmonization of supervisory styles (regulation being equal) plays a central role. Our paper addresses a central question: what supervisory culture has been demonstrated to be most effective at ensuring the stability of European banks? We identify six different supervisory cultures and observe to what extent the words used in public speeches by the deans of the national supervision authority reflect the national cultural values of the Hofstede framework (Hofstede et al., 2010). By analyzing a panel of banks operating in the EU-15 from 1999 and 2011, our paper provides empirical evidence that supervisory culture influences the stability of banks. Our results have important policy implications: our paper is the first to provide empirical evidence of heterogeneity in the supervision styles in Europe and its effect on banking stability.

U2 - 10.1016/j.jbankfin.2014.09.015

DO - 10.1016/j.jbankfin.2014.09.015

M3 - Article

VL - 52

SP - 180

EP - 188

JO - Journal of Banking and Finance

JF - Journal of Banking and Finance

SN - 0378-4266

ER -