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Regulatory enforcement: discipline for BHC-affiliated banks

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  • Chris Tsoumas

    (Hellenic Open University)

Abstract

I examine the disciplinary response of non-punished BHC-affiliated banks with respect to capitalization, risk, liquidity and size to enforcement actions of differing severity imposed on the punished members of the BHC group in the USA over the 2000–2014 period. The results show that a response to more severe enforcement actions is generally present, although it is only partly adequate from a regulatory perspective and is much more pronounced when the action has been imposed on the BHC itself. Moreover, the organizational characteristics of BHCs, such as majority stake ownership and increased market scrutiny, affect the disciplinary behavior of the affiliate(s). Finally, less severe enforcement actions seem to cause a disciplinary response of non-punished BHC-affiliate(s) in the post-crisis period.

Suggested Citation

  • Chris Tsoumas, 2021. "Regulatory enforcement: discipline for BHC-affiliated banks," Empirical Economics, Springer, vol. 60(2), pages 737-772, February.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:2:d:10.1007_s00181-019-01771-9
    DOI: 10.1007/s00181-019-01771-9
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    More about this item

    Keywords

    Formal enforcement actions; Banks; Discipline; Regulation; Panel;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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