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European banking union and bank risk disclosure

Speaker: Professor Yener Altunbas, Bangor University
Time: Wednesday, 11 December 2019, 13:00-15:00
Venue: S314 (Paul Webley Wing, Senate House), SOAS University of London

Abstract
This paper provides evidence on the impact of European Banking Union (BU) and the associated Single Supervisory Mechanism (SSM) on the risk disclosure practices of European banks. The onset of BU and the associated rules are considered as an exogenous shock that provides the setting for a natural experiment on their impact on bank risk disclosure. A Difference-in-Differences approach is adopted, building evidence from the disclosure practices of systemically important banks supervised by the European Central Bank (ECB) and other banks supervised by national regulators over the period 2012-2017. The main findings are that bank risk disclosure increased overall following BU but there was a weakening of disclosure by SSM-supervised banks relative to banks supervised by national regulators. The results suggest that the institutional arrangements for bank supervision under BU under which the ECB relies on local supervisors to collect the information necessary to act gives rise to inefficiencies with respect to the speed and completeness of the information flow between SSM supervised banks and the ECB, which might be overcome by having these banks report directly to the ECB.

JEL codes: G21, G28, G38

Keywords: Risk disclosure, Banks, Banking Union, Single Supervisory Mechanism, Principal-Agent problem

About speaker
Yener Altunbaş is a Professor of Economics at Bangor Business School. He worked first as an analyst with Ziraat and then as an economist in Etibank Banking Inc. in Turkey and as a Research Officer within the Institute of European Finance in the UK. He also held a Visiting Researcher post at the European Central Bank (ECB), Bank for International Settlements (BIS). Professor Altunbaş is currently a consultant for ECB, BIS and he is collaborating on research projects with other colleagues at the International Monetary Fund (IMF), Bank of Italy, Bank of Spain and Central Bank of Turkey. Recently, he has been acting as a Commonwealth Scholarships Academic Adviser. Author of many articles on the structure and efficiency of banking markets, his main fields of research interest include: the study of European banks, efficiency, stock market analysis, corporate governance, electoral studies, regional economics and urban economics. Recent research has also been concerned with marine biology.

The seminars are sponsored by grants from DFID and ESRC [ESRC Ref: ES/N013344/2], ESRC and NSFC [ESRC Ref: ES/P005241/1] and AXA Research Fund