Regulatory oversight and bank risk
Abstract
We investigate how a change in regulatory oversight affects bank risk, using the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 as a setting. Using a sample of bank holding companies (BHCs) covering the period 2015Q1 through 2020Q1, we find that risk increases for large BHCs affected by a change in regulatory oversight. In addition to increasing bank level risk, affected BHCs increase their respective contribution to the systemic risk. These BHCs also experience higher profitability, increased market valuation and reduced compliance costs.
Citation
Chronopoulos , D , Wilson , J O S & Yilmaz , M H 2023 , ' Regulatory oversight and bank risk ' , Journal of Financial Stability , vol. 64 , 101105 . https://doi.org/10.1016/j.jfs.2023.101105
Publication
Journal of Financial Stability
Status
Peer reviewed
ISSN
1572-3089Type
Journal article
Rights
Copyright © 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by- nc-nd/4.0/).
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