Surprised or not surprised? The investors' reaction to the comprehensive assessment preceding the launch of the banking union

Article


Carboni, M., Fiordelisi, F., Ricci, O. and Stentella Lopez, F. 2017. Surprised or not surprised? The investors' reaction to the comprehensive assessment preceding the launch of the banking union. Journal of Banking and Finance. 74, pp. 122-132. https://doi.org/10.1016/j.jbankfin.2016.11.004
TypeArticle
TitleSurprised or not surprised? The investors' reaction to the comprehensive assessment preceding the launch of the banking union
AuthorsCarboni, M., Fiordelisi, F., Ricci, O. and Stentella Lopez, F.
Abstract

Did the Comprehensive Assessment (CA), preceding the Single Supervisory Mechanism (SSM) launch in Europe, achieve its aims of producing new valuable information for the market? We show that the CA achieved the goal of increasing transparency: investors were able to detect weak banks at the announce- ment of the procedure (23rd October 2013), but gained full information on the amount of the capital shortfall only at the disclosure of the results (26th October 2014). Furthermore, at the official launch of the SSM (4th November 2014), banks under direct European Central Bank (ECB) supervision registered a more negative market reaction with respect to banks maintaining their national supervisors. Using a regression model including possible confounders and allowing for treatment effect heterogeneity, this negative reaction is confirmed. These findings suggest that, at least in the short run, investors penalized banks subject to direct ECB supervision, probably because of the fear of regulatory inconsistencies.

LanguageEnglish
PublisherElsevier
JournalJournal of Banking and Finance
ISSN0378-4266
Publication dates
Online03 Nov 2016
Print01 Jan 2017
Publication process dates
Deposited30 Aug 2018
Accepted02 Nov 2016
Output statusPublished
Accepted author manuscript
License
Copyright Statement

© 2016. This author's accepted manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Digital Object Identifier (DOI)https://doi.org/10.1016/j.jbankfin.2016.11.004
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