The Single Supervisory Mechanism and its implications for the profitability of European banks

I. Avgeri, Yiannis Dendramis () and Helen Louri

Journal of International Financial Markets, Institutions and Money, 2021, vol. 74, issue C

Abstract: One of the main problems of European banks is their low profitability, often attributed to burdensome new regulation. In this paper we investigate whether the establishment of the Single Supervisory Mechanism (SSM) influenced the profitability of European banks using the returns on assets and equity as alternative indicators and applying the difference-in-differences methodology combined with matching techniques. Our main findings indicate a statistically significant and positive effect on profitability for the directly supervised banks, and especially banks located in the euro area periphery. Institutional improvements introduced by the SSM have been beneficial for improving performance and enhancing integration of the banking sector.

Keywords: European Banking Union; SSM; Bank profitability; Difference-in-differences estimation (search for similar items in EconPapers)
JEL-codes: C23 C51 G21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: The Single Supervisory Mechanism and its implications for the profitability of European Banks (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:74:y:2021:i:c:s1042443121001013

DOI: 10.1016/j.intfin.2021.101382

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