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The real effects of regulatory enforcement actions: evidence from U.S. counties

Research output: Working paper

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The real effects of regulatory enforcement actions : evidence from U.S. counties. / Danisewicz, Piotr; McGowan, Danny; Onali, Enrico; Schaeck, Klaus.

2014. p. 1-44.

Research output: Working paper

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Danisewicz, Piotr ; McGowan, Danny ; Onali, Enrico ; Schaeck, Klaus. / The real effects of regulatory enforcement actions : evidence from U.S. counties. 2014. pp. 1-44

Bibtex

@techreport{6e4474332dd34709a256209b2471db3d,
title = "The real effects of regulatory enforcement actions: evidence from U.S. counties",
abstract = "We highlight an important macro-financial linkage: Severe regulatory enforcement actions such as Formal agreements, Prompt corrective actions, and Cease and desist orders on banks trigger temporarily adverse effects for the macroeconomy. We use instrumental variables regressions to show that such actions imposed on single-market banks reduce personal income growth, the number of establishments, and increase unemployment in U.S. counties. These effects are related to contractions in bank lending and liquidity creation. Our identification is sharpened by a series of tests based on falsification tests and placebo enforcement actions. We can rule out several alternative explanations that may confound our results.",
keywords = "bank distress, enforcement actions, local economic growth, macro-financial linkages",
author = "Piotr Danisewicz and Danny McGowan and Enrico Onali and Klaus Schaeck",
year = "2014",
language = "English",
pages = "1--44",
type = "WorkingPaper",

}

RIS

TY - UNPB

T1 - The real effects of regulatory enforcement actions

T2 - evidence from U.S. counties

AU - Danisewicz, Piotr

AU - McGowan, Danny

AU - Onali, Enrico

AU - Schaeck, Klaus

PY - 2014

Y1 - 2014

N2 - We highlight an important macro-financial linkage: Severe regulatory enforcement actions such as Formal agreements, Prompt corrective actions, and Cease and desist orders on banks trigger temporarily adverse effects for the macroeconomy. We use instrumental variables regressions to show that such actions imposed on single-market banks reduce personal income growth, the number of establishments, and increase unemployment in U.S. counties. These effects are related to contractions in bank lending and liquidity creation. Our identification is sharpened by a series of tests based on falsification tests and placebo enforcement actions. We can rule out several alternative explanations that may confound our results.

AB - We highlight an important macro-financial linkage: Severe regulatory enforcement actions such as Formal agreements, Prompt corrective actions, and Cease and desist orders on banks trigger temporarily adverse effects for the macroeconomy. We use instrumental variables regressions to show that such actions imposed on single-market banks reduce personal income growth, the number of establishments, and increase unemployment in U.S. counties. These effects are related to contractions in bank lending and liquidity creation. Our identification is sharpened by a series of tests based on falsification tests and placebo enforcement actions. We can rule out several alternative explanations that may confound our results.

KW - bank distress

KW - enforcement actions

KW - local economic growth

KW - macro-financial linkages

M3 - Working paper

SP - 1

EP - 44

BT - The real effects of regulatory enforcement actions

ER -