The spillover effect of enforcement actions on bank risk-taking

Matteo Cotugno, Stefano Caiazza, Franco Fiordelisi, Valeria Stefanelli

Research output: Contribution to journalArticlepeer-review

Abstract

Enforcement actions (sanctions) aim to penalize guilty companies and provide examples to other companies that bad behavior will be penalized. A handful of papers analyze the consequences of sanctions in banking for sanctioned companies, while no papers have investigated the spillover effects on non-sanctioned banks. Focusing on credit-related sanctions, we show the existence of a spillover effect: non-sanctioned banks behave similar to sanctioned banks, depending on their degree of similarity, offloading problematic loans and reducing their lending activity.
Original languageEnglish
Pages (from-to)146-159
Number of pages14
JournalJOURNAL OF BANKING & FINANCE
Volume91
DOIs
Publication statusPublished - 2018

Keywords

  • Banking
  • Spillover effect
  • Enforcement action
  • Credit

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