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The impact of supervision on bank performance

Beverly Hirtle, Anna Kovner and Matthew Plosser ()

No 768, Staff Reports from Federal Reserve Bank of New York

Abstract: We explore the impact of supervision on the riskiness, profitability, and growth of U.S. banks. Using data on supervisors? time use, we demonstrate that the top-ranked banks by size within a supervisory district receive more attention from supervisors, even after controlling for size, complexity, risk, and other characteristics. Using a matched sample approach, we find that these top-ranked banks that receive more supervisory attention hold less risky loan portfolios and are less volatile and less sensitive to industry downturns, but do not have slower growth or profitability. Our results underscore the distinct role of supervision in mitigating banking sector risk.

Keywords: bank supervision; bank regulation; bank performance (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2016-03-01, Revised 2016-07-01
New Economics Papers: this item is included in nep-ban
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Journal Article: The Impact of Supervision on Bank Performance (2020) Downloads
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