Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228461
Authors: 
Altavilla, Carlo
Boucinha, Miguel
Peydró, José-Luis
Smets, Frank
Year of Publication: 
2020
Abstract: 
We analyse the effects of national versus supranational banking supervision on bank risk-taking, 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 in European banking supervision; (iii) high-frequency monetary policy surprises; (iv) cross-country difference within and outside the euro area. First, supranational supervision reduces credit supply to firms with high credit risk, but strengthens credit supply to firms without loan delinquencies, especially for banks operating in stressed countries. Results are driven by two mechanisms: the country’s institutional quality where banks operate, and bank-level systemic importance. Second, there are important complementarities between monetary policy and supervision: centralised supervision offsets high credit risk-taking induced by accommodative monetary policy, but not credit supply to more productive firms. Overall, we show that using multiple credit registers – first time in the literature – is crucial for external validity.
Subjects: 
banking
supervision
monetary policy
AnaCredit
euro area crisis
JEL: 
E02
E52
E58
G01
G21
G28
Document Type: 
Working Paper

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