This dissertation provides new empirical evidence on the costs, and benefits of European Union-wide supervisory programs that are incorporated in the aftermath of the Financial Crisis, and subsequent European Sovereign Debt Crisis. In particular, the dissertation focuses on EU-wide stress test exercises, conducted by the European Banking Authority (EBA), and on the European Banking Union wherewith the supervision of “significant” Euro area banks moves from national authorities to the supranational European Central Bank (ECB). The dissertation analyses multiple data sets related to European banks, and European countries, most importantly, market data from 2010 to 2018, and bank balance sheet data from 2008 to 2017.
This dissertation explores three research questions. First, I investigate if the shift in institutional mandates that follows the European Banking Union impacts the efficacy of macro-prudential stress test exercises to produce new, and relevant information to market participants. With the European Banking Union, the ECB holds a banking supervision mandate for “significant” Eurozone banks, a financial stability mandate, and relevant stakes in the design of EU-wide stress tests. Second, I analyze real effects of the incorporation of EU-wide stress test exercises on the loan supply to the economy. Here fore, I consider the regulator’s trade-off between lenient stress test designs that might encourage credit risk taking by tested banks, but might harm the regulator’s reputation, and tough designs that might cause banks to reduce credit supply, however, at the expense of the real economy. Third, I investigate the real effects of the European Banking Union on the interbank lending activity of “significant”, ECB-supervised banks. The Banking Union aims to, inter alia, reduce sources of systemic risk that stem from high bank interconnectivity while interbank lending typically poses such an interconnected market.
The dissertation has three main findings. First, I show that stress test information production significantly reduces after the ECB-takeover of supervisory tasks wherewith the mandates for stress testing, and for banking supervision are merged into the joint hands of the EU authorities EBA, and ECB. Second, I find banks that fail the early stress test exercises to substantially reduce their supply of loans to the real economy as a means to promptly repair their balance sheets. Third, I find banks under ECB supervision to significantly reduce their exposure to interbank loans as a means to reduce the Eurozone’s systemic risk that stems from bank interconnectedness. Overall, this dissertation sheds new light on the success or failure of European supervisory programs to achieve the goals that EU authorities predefined to enhance financial stability. It has important implications on the design choices for such programs, as well as on multiple stakeholders, the banking industry, bank supervisors, bank regulators, bank investors or creditors, and the real economy.
«
This dissertation provides new empirical evidence on the costs, and benefits of European Union-wide supervisory programs that are incorporated in the aftermath of the Financial Crisis, and subsequent European Sovereign Debt Crisis. In particular, the dissertation focuses on EU-wide stress test exercises, conducted by the European Banking Authority (EBA), and on the European Banking Union wherewith the supervision of “significant” Euro area banks moves from national authorities to the supranation...
»
Login
BibTeX