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The effect of supranational banking supervision on the financial sector: Event study evidence from Europe

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  • Loipersberger, Florian

Abstract

This paper investigates how the introduction of the Single Supervisory Mechanism, the European Union’s implementation of harmonized banking supervision, has affected the banking sector in Europe. I perform an event study on banks’ stock returns and find evidence for small but significant positive effects. A potential hypothesis for this result is the fact that a single supervisory authority can take spillover effects between countries into account and is therefore able to stabilize the European banking sector. Splitting the sample by an indicator for supervisory power, an indicator for corruption, and by debt/GDP reveals that the positive impact of the SSM was stronger for banks in countries that perform poorly with respect to these measures.

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  • Loipersberger, Florian, 2018. "The effect of supranational banking supervision on the financial sector: Event study evidence from Europe," Journal of Banking & Finance, Elsevier, vol. 91(C), pages 34-48.
    • Handle: RePEc:eee:jbfina:v:91:y:2018:i:c:p:34-48
    DOI: 10.1016/j.jbankfin.2018.04.003
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    More about this item

    Keywords

    Banks; Event study; Supervision; Single Supervisory Mechanism; Harmonization;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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