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

Research output: Contribution to journalArticlepeer-review

Electronic versions

  • Alessandro Carretta
    University of Rome
  • Vincenzo Farina
    University of Rome
  • Franco Fiordelisi
    University of Rome III
  • Schwizer Paola
    University of Parma
  • Francesco Stentella Lopes
    University of Rome III
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.
Original languageEnglish
Pages (from-to)180-188
JournalJournal of Banking and Finance
Volume52
Early online date28 Sept 2014
DOIs
Publication statusPublished - Mar 2015
Externally publishedYes
View graph of relations