Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216793
Authors: 
Altavilla, Carlo
Boucinha, Miguel
Peydró, José-Luis
Smets, Frank
Year of Publication: 
2019
Series/Report no.: 
Economic Working Paper Series 1684
Abstract: 
We analyse the effects of supranational versus national banking supervision on credit supply, and its interactions with monetary policy. For identification, we exploit: (i) a new, proprietary dataset based on 15 European credit registers; (ii) the institutional change leading to the centralisation of European banking supervision; (iii) high-frequency monetary policy surprises; (iv) differences across euro area countries, also vis-à-vis non-euro area countries. We show that supranational supervision reduces credit supply to firms with very high ex-ante and ex-post credit risk, while stimulating credit supply to firms without loan delinquencies. Moreover, the increased risk-sensitivity of credit supply driven by centralised supervision is stronger for banks operating in stressed countries. Exploiting heterogeneity across banks, we find that the mechanism driving the results is higher quantity and quality of human resources available to the supranational supervisor rather than changes in incentives due to the reallocation of supervisory responsibility to the new institution. Finally, there are crucial complementarities between supervision and monetary policy: centralised supervision offsets excessive bank risk-taking induced by a more accommodative monetary policy stance, but does not offset more productive risk-taking. Overall, we show that using multiple credit registers – first time in the literature – is crucial for external validity.
Subjects: 
supervision
banking
AnaCredit
monetary policy
Euro Area crisis
JEL: 
E51
E52
E58
G01
G21
G28
Document Type: 
Working Paper

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