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

Ioanna Avgeri, Yiannis Dendramis () and Helen Louri ()
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Ioanna Avgeri: Athens University of Economics and Business

No 284, Working Papers from Bank of Greece

Abstract: The scope of this paper is to examine if and how the establishment of the Single Supervisory Mechanism (SSM) influenced the profitability of European banks. To do so, we employ the returns on assets and equity as alternative indicators for profitability. Using data for 344 European banks in 2011-2017 we apply 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, especially banks located in the periphery of the euro area, implying that institutional improvements introduced by the SSM were beneficial not only for strengthening stability and increasing credibility but also for improving performance and enhancing integration.

Keywords: European Banking Union; SSM; Bank profitability; policy evaluation (search for similar items in EconPapers)
JEL-codes: C23 C51 G21 (search for similar items in EconPapers)
Pages: 32
Date: 2020-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-eff
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