The technical note and manual "Sibling Rivalry in the Financial Safety Net," authored by Atilla Arda and Jan Nolte, examines the governance structures essential critical for effective bank resolution and deposit insurance functions. Considering the vulnerabilities exposed during the 2008-09...

This paper develops an early warning system for predicting distress for large European banks. Using a novel definition of distress derived from banks' headroom above regulatory requirements, we investigate the performance of three machine learning techniques against the traditional logistic...

We study whether and how EU banks comply with tighter macroprudential policy (MPP). Observing contractual details for more than one million securitized loans, we document an elusive risk-shifting response by EU banks in reaction to tighter loan-to-value (LTV) restrictions between 2009 and 2022....

Regulators increasingly rely on supervisory technologies (SupTech) to enhance bank supervision, but their potential role in disciplining bank behavior remains unclear. We address this knowledge gap using unique data from the SupTech application of the Central Bank of Brazil. We show that, after...

Regardless of the individual perspectives on Artificial Intelligence (AI), it can transform the personal and professional lives at an unprecedented pace. It will also impact one of the most regulated and supervised industries in the world - the financial sector. Risk-based supervision (RBS) has...

This paper examines how microprudential policy affects income inequality, and whether and how the effect of macroprudential policy on income inequality depends on the stance of microprudential policy. The dataset covers 70 countries over the period 1996-2013. Applying the system GMM estimation...

This paper explores the impact of bank transparency on market efficiency by comparing banks that disclose supervisory capital requirements to those that remain opaque. Due to the informational content of supervisory capital requirements for the market this opacity might hinder market efficiency....

A large literature at the intersection of economics and finance offers prescriptions for regulating banks to increase financial stability. This literature abstracts from the discretion that accounting standards give banks over financial reporting, creating a gap between the information assumed...

A large literature at the intersection of economics and finance offers prescriptions for regulating banks to increase financial stability. This literature abstracts from the discretion that accounting standards give banks over financial reporting, creating a gap between the information assumed...

Kann die Bankenaufsicht den Übergang zu einer kohlenstoffneutralen Wirtschaft unterstützen, indem sie die Kreditvergabe der Banken an Unternehmen beeinflusst? Dieser Beitrag untersucht die Kreditvergabe der Banken vor und nach dem weltweit ersten Klimastresstest in Frankreich und die Reaktion...

Der "umgekehrte Drehtüreffekt" beschreibt das Phänomen, wenn ehemalige Bankerinnen und Banker Vorstandspositionen in nationalen Aufsichtsbehörden (National Supervisory Agency, NSA) bekleiden. Ein neu erhobener Datensatz zeigt, dass etwa ein Drittel der Vorstandsmitglieder in europäischen NSA...

We examine the issue of the appropriate selection of macroprudential instruments according to the vulnerabilities identified and the policymakers' objectives using a version of the 3D DSGE model following Mendicino et al. (2020) and Hinterschweiger et al. (2021) calibrated for the euro area. We...

The results of this paper provide empirical evidence that regulatory capital ratios drive bank Credit Default Swaps (CDS) and that markets react more to changes in capital requirements if implemented via direct adjustments to Pillar 1 risk weights than imposed as a percentage of Risk-Weighted...

This study discusses and analyses on a targeted basis and in a systematic way the evolution and key aspects of the case-law of the Court of Justice of the European Union (CJEU) in relation to the two key pillars of the Banking Union in force, namely, the Single Supervisory and the Single...

This study discusses and analyses on a targeted basis and in a systematic way the evolution and key aspects of the case-law of the Court of Justice of the European Union (CJEU) in relation to the two key pillars of the Banking Union in force, namely, the Single Supervisory and the Single...

This paper discusses EU case law developed over the past decade relating to decisions taken by the European Central Bank within the Single Supervisory Mechanism (SSM) and within the Single Resolution Mechanism (SRM). The cases centre around embracing and solidifying the BU framework, inter alia,...

The results of this paper provide empirical evidence that regulatory capital ratios drive bank Credit Default Swaps (CDS) and that markets react more to changes in capital requirements if implemented via direct adjustments to Pillar 1 risk weights than imposed as a percentage of Risk-Weighted...

This paper discusses EU case law developed over the past decade relating to decisions taken by the European Central Bank within the Single Supervisory Mechanism (SSM) and within the Single Resolution Mechanism (SRM). The cases centre around embracing and solidifying the BU framework, inter alia,...

This report provides an overview of the state of play of resolution planning and crisis management in respect of the less significant institutions (LSIs) under the direct responsibility of the national resolution authorities (NRAs). Many colleagues from across the Single Resolution Mechanism...

The Administrative Board of Review (ABoR) is a body of the ECB that carries out reviews of the institution's supervisory decisions. An administrative review may be requested by any person or legal entity directly affected by an ECB supervisory decision. The ABoR members are independent external...

The Administrative Board of Review (ABoR) is a body of the ECB that carries out reviews of the institution's supervisory decisions. An administrative review may be requested by any person or legal entity directly affected by an ECB supervisory decision. The ABoR members are independent external...

The shift in the interest rate environment has helped less significant institutions (LSIs) to improve profitability and capital levels over the past two years thanks to higher net interest margins. At the same time, there are persistent issues in parts of the LSI sector, such as pressure to...

Since its inception nearly a decade ago, the annual European System of Central Banks (ESCB) Legal Conference has become a vital forum for legal scholars, practitioners, supervisors, and central bankers. The 2024 edition of the ESCB Legal Conference builds on this tradition by addressing key...

The shift in the interest rate environment has helped less significant institutions (LSIs) to improve profitability and capital levels over the past two years thanks to higher net interest margins. At the same time, there are persistent issues in parts of the LSI sector, such as pressure to...

Political influence on bank credit allocation is often viewed as being necessary to address social problems like income inequality. We hypothesize that such influence elicits bank capital responses. Our hypothesis yields three testable predictions for which we find supporting evidence. First,...

Increases in firm default risk raise the default probability of banks while decreasing output and inflation in US data. To rationalize the empirical evidence, we analyse firm risk shocks in a New Keynesian model where entrepreneurs and banks engage in a loan contract and both are subject to...

The aim of the study was to determine the impact of increased capital adequacy standards of second-tier banks on their performance. The study is based on second-tier banks of EU member states, as these countries are the first to implement the Basel Committee recommendations, so their experience...