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Transnational banking supervision, distance-to-distress and credit risk: the SSM case

dc.contributor.authorAlves, Carlos F.
dc.contributor.authorMarques, Bernardo P.
dc.contributor.authorSilva, Joana C.
dc.date.accessioned2022-07-11T17:17:04Z
dc.date.available2023-12-23T01:30:56Z
dc.date.issued2023
dc.description.abstractWe assess the impact of adopting a transnational supervisor on the distance-to-distress and credit risk of large and complex banks, exploring the establishment of the Single Supervisory Mechanism (SSM) in 2014 as a quasi-natural experiment. Using a differences-indifferences approach, we compare SSM banks vis-à-vis banks with a similar size and complexity operating in European countries outside the SSM. Our results suggest that adopting a transnational supervisor increases the distance-to-distress, particularly for banks operating in countries with larger banking sectors, higher market concentration and greater supervisory discretion. We also show that SSM banks reduced loan loss reserves and NPLs significantly more than non-SSM banks, but only among the most capitalized banks-which is consistent with the notion that well-capitalized banks are better able to weather haircuts induced by credit risk reduction initiatives. Interestingly, we find that SSM banks from countries with greater supervisory discretion saw their NPLs increase in the first years of the SSM, which could reflect the elimination of national idiosyncrasies in credit risk accounting. In general, the evidence presented in our paper suggests that transnational supervision bears a superior ability to increase the distance-to-distress, reduce credit risk, and harmonize supervisory practices among large and complex banks.pt_PT
dc.description.versioninfo:eu-repo/semantics/acceptedVersionpt_PT
dc.identifier.doi10.1080/13504851.2022.2092590pt_PT
dc.identifier.eid85132783844
dc.identifier.issn1350-4851
dc.identifier.urihttp://hdl.handle.net/10400.14/38164
dc.identifier.wos000815372000001
dc.language.isoengpt_PT
dc.peerreviewedyespt_PT
dc.subjectBankingpt_PT
dc.subjectCredit riskpt_PT
dc.subjectDistance-to-distresspt_PT
dc.subjectSupervisionpt_PT
dc.subjectONDspt_PT
dc.titleTransnational banking supervision, distance-to-distress and credit risk: the SSM casept_PT
dc.typejournal article
dspace.entity.typePublication
oaire.citation.endPage2085
oaire.citation.issue15
oaire.citation.startPage2079
oaire.citation.titleApplied Economics Letterspt_PT
oaire.citation.volume30
rcaap.rightsopenAccesspt_PT
rcaap.typearticlept_PT

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