Observing Enforcement: Evidence from Banking

78 Pages Posted: 4 Feb 2019 Last revised: 24 Dec 2019

See all articles by Anya Kleymenova

Anya Kleymenova

The University of Chicago Booth School of Business

Rimmy E. Tomy

University of Chicago

Date Written: December 24, 2019


We find the public disclosure of regulators' actions influences their enforcement behavior. Using a change in regulation regime, which required disclosure of bank enforcement actions (EDOs), we find that regulators start issuing more EDOs, intervening sooner, and relying more on publicly observable signals. The content of EDOs also changes, with documents becoming more complex and boilerplate. Our results suggest regulators respond to the increased public scrutiny of their actions. We also assess the impact of disclosure on bank outcomes and find a decline in deposits and an acceleration of bank failure, despite improvements in banks' capital ratios and asset quality.

Keywords: Disclosure, Enforcement actions, Regulatory incentives, Banking

JEL Classification: G21, G28

Suggested Citation

Kleymenova, Anya V. and Tomy, Rimmy, Observing Enforcement: Evidence from Banking (December 24, 2019). Chicago Booth Research Paper No. 19-05; Fama-Miller Working Paper. Available at SSRN: https://ssrn.com/abstract=3327502 or http://dx.doi.org/10.2139/ssrn.3327502

Anya V. Kleymenova (Contact Author)

The University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-4348 (Phone)

Rimmy Tomy

University of Chicago ( email )

Booth School of Business
5807 S Woodlawn Ave
Chicago, IL 60637
United States

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