Logo
Munich Personal RePEc Archive

Supervisory effectiveness and bank risk

Delis, Manthos D and Staikouras, Panagiotis (2010): Supervisory effectiveness and bank risk.

This is the latest version of this item.

[thumbnail of MPRA_paper_27242.pdf]
Preview
PDF
MPRA_paper_27242.pdf

Download (388kB) | Preview

Abstract

This paper investigates the role of banking supervision in controlling bank risk. Banking supervision is measured in terms of enforcement outputs (i.e., on-site audits and sanctions). Our results show an inverted U-shaped relationship between on-site audits and bank risk, while the relationship between sanctions and risk appears to be linear and negative. We also consider the combined effect of effective supervision and banking regulation (in the form of capital and market discipline requirements) on bank risk. We find that effective supervision and market discipline requirements are important and complementary mechanisms in reducing bank fragility. This is in contrast to capital requirements, which prove to be rather futile in controlling bank risk, even when supplemented with a higher volume of on-site audits and sanctions.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.