Electronic versions

Documents

DOI

  • Marika Carboni
    University of Rome, Italy
  • Franco Fiordelisi
    University of Rome, Italy
  • Ornella Ricci
    Middlesex Business School, London
  • Francesco Stentella Lopes
Did the Comprehensive Assessment (CA), preceding the Single Supervisory Mechanism (SSM) launch in Europe, achieve its aims of producing new valuable information for the market? We show that the CA achieved the goal of increasing transparency: investors were able to detect weak banks at the announcement of the procedure (23rd October 2013), but gained full information on the amount of the capital shortfall only at the disclosure of the results (26th October 2014). Furthermore, at the official launch of the SSM (4th November 2014), banks under direct European Central Bank (ECB) supervision registered a more negative market reaction with respect to banks maintaining their national supervisors. Using a regression model including possible confounders and allowing for treatment effect heterogeneity, this negative reaction is confirmed. These findings suggest that, at least in the short run, investors penalized banks subject to direct ECB supervision, probably because of the fear of regulatory inconsistencies

Keywords

  • Banking, Supervision, Regulation, Lending, Risk-taking
Original languageEnglish
Pages (from-to)122-132
JournalJournal of Banking and Finance
Volume74
Early online date3 Nov 2016
DOIs
Publication statusPublished - Jan 2017

Total downloads

No data available
View graph of relations