Supervisory Enforcement Actions and Bank Deposits

63 Pages Posted: 28 Jul 2017 Last revised: 18 Apr 2019

See all articles by Manthos D. Delis

Manthos D. Delis

Montpellier Business School

Panagiotis Staikouras

University of Piraeus

Chris Tsoumas

Hellenic Open University

Multiple version iconThere are 2 versions of this paper

Date Written: April 17, 2019

Abstract

We assess the effect of formal enforcement actions against banks for safety and soundness reasons on punished banks’ deposits, and then examine whether this effect is caused by demand-side or supply-side forces. To this end, we use hand-collected data on enforcement actions, and bank-quarter data on deposits and other bank characteristics from 2000 through 2014. Our results show that total deposits at punished banks decrease by 8.5% in the post-enforcement year, with uninsured deposits declining by 14.5% and insured deposits falling by 7.4%. We also find that the deposit decline is predominantly caused by demand-side forces, that is, by punished banks’ decision to curtail the asset side of their balance sheet.

Keywords: Enforcement actions, Bank deposits, Depositor monitoring

JEL Classification: G21, G28, G01

Suggested Citation

Delis, Manthos D. and Staikouras, Panagiotis and Tsoumas, Chris, Supervisory Enforcement Actions and Bank Deposits (April 17, 2019). Available at SSRN: https://ssrn.com/abstract=3009125 or http://dx.doi.org/10.2139/ssrn.3009125

Manthos D. Delis (Contact Author)

Montpellier Business School ( email )

2300 Avenue des Moulins
Montpellier, 34080
France

Panagiotis Staikouras

University of Piraeus ( email )

80 Karaoli & Dimitriou Str.
Piraeus, Attika 18534
Greece

Chris Tsoumas

Hellenic Open University ( email )

Parodos Aristotelous 18
26335 Patra
Greece

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