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  • Enforcement actions JFI R1 20 OCT

    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Financial Intermediation. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Intermediation, 35, Part A, 2018 DOI: 10.1016/j.jfi.2016.10.003

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The real effects of banking supervision: evidence from enforcement actions

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>07/2018
<mark>Journal</mark>Journal of Financial Intermediation
Issue numberPart A
Volume35
Number of pages16
Pages (from-to)86-101
Publication statusPublished
Early online date27/10/16
Original languageEnglish

Abstract

We present a novel way to examine macro-financial linkages by focusing on the real effects of bank supervisors’ enforcement actions. Exploiting plausibly exogenous variation in supervisory monitoring intensity, we show that enforcement actions in single-market banks trigger temporarily large adverse effects for the macroeconomy by reducing personal income growth, the number of establishments, and increasing unemployment. These effects are related to contractions in bank lending and liquidity creation, and are more pronounced when we consider enforcement actions on both single-market and multi-market banks, and in counties with fewer banks and greater external financial dependence.

Bibliographic note

This is the author’s version of a work that was accepted for publication in Journal of Financial Intermediation. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Intermediation, 35, Part A, 2018 DOI: 10.1016/j.jfi.2016.10.003