How Financial Shocks Transmit to the Real Economy? Banking Business Models and Firm Size

Vinas, Frédéric

doi:10.2139/ssrn.3545805

Cited by 1 publication

(2 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…While the inception of the Single Supervisory Mechanism, in November 2014, has sought to harmonize enforcement action disclosure obligations across Europe, national reporting nonetheless remains heterogeneous (Götz & Tröger, 2017). 33 Disclosure of misconduct in banking is a critically sensitive matter due to the central role of the financial sector in the transmission of shocks to the real economy (Cornett et al, 2011;Vinas, 2021).…”

Section: Regulatory Policy Implicationsmentioning

confidence: 99%

“…Financial sector misconduct has risen to a level that has the potential to create systemic risks, that is, the risk that banks may fail together, and undermine trust in financial institutions and the market (Mark Carney, former governor of the Bank of England; Financial Stability Board, 2018). The extent of an equity market spillover effect in the financial sector, due to the disclosure of misconduct, is of critical importance due to the central role of the financial sector in the transmission of shocks to the real economy (e.g., Cornett et al, 2011; Vinas, 2021). In a European Systemic Risk Board report in 2015, it is indicated: ‘Confidence is fundamental to the stability of the banking sector and financial markets.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Law enforcement spillover effects in the financial sector

Agarwal

Muckley

2022

Euro Fin Management

View full text Add to dashboard Cite

Recipient firms but also comparable peer firms exhibit a sizeable negative capital market reaction to United Kingdom's regulatory enforcement actions. This result is invariant to the identification of peer firms as belonging to the same industry classification or as having comparable propensity scores to attract a sanction. Indiscriminate regulatory contagion, however, is ruled out. As per expectation, enforcement actions which pierce the ‘corporate veil’, that is, target an individual within a firm, are related to no significant firm‐level market reactions. These findings, in the financial sector, indicate that sanctions are associated with a material spillover effect consistent with informed regulatory contagion.

show abstract

Section: Regulatory Policy Implicationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%