TY - JOUR

T1 - The Unintended Consequences of the Single-Supervisory Mechanism Launch in Europe

AU - Fiordelisi, Franco

AU - Ricci, Ornella

AU - Stentella Lopes, Francesco Saverio

PY - 2017/12/27

Y1 - 2017/12/27

N2 - The launch of the Single Supervisory Mechanism (SSM) was an historic event. Beginning in Nov. 2014, the most significant banks came under the direct supervision of the European Central Bank, while national supervisory authorities maintained direct supervision of the remaining banks. Thus, supervision is conducted on two levels, which could cause inconsistency problems.Did the behavior of the significant banks differ from that of the less significant banks during the SSM launch? We find that the significant banks reduced their lending activity more than the less significant banks did in order to shrink their balance sheets and increase their capitalization.

AB - The launch of the Single Supervisory Mechanism (SSM) was an historic event. Beginning in Nov. 2014, the most significant banks came under the direct supervision of the European Central Bank, while national supervisory authorities maintained direct supervision of the remaining banks. Thus, supervision is conducted on two levels, which could cause inconsistency problems.Did the behavior of the significant banks differ from that of the less significant banks during the SSM launch? We find that the significant banks reduced their lending activity more than the less significant banks did in order to shrink their balance sheets and increase their capitalization.

U2 - 10.1017/S0022109017000886

DO - 10.1017/S0022109017000886

M3 - Article

VL - 52

SP - 2809

EP - 2836

JO - Journal of Financial and Quantitative Analysis

JF - Journal of Financial and Quantitative Analysis

SN - 0022-1090

IS - 6

ER -