The Unintended Consequences of the Single-Supervisory Mechanism Launch in Europe
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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.
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.
| Original language | English |
|---|---|
| Pages (from-to) | 2809-2836 |
| Journal | Journal of Financial and Quantitative Analysis |
| Volume | 52 |
| Issue number | 6 |
| DOIs | |
| Publication status | Published - 27 Dec 2017 |
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