XXV Edition

1-2 December 2016"

Corporate culture and enforcement actions in banking

Fiordelisi Franco, University of Rome III

Enforcement actions are a key tool for supervisors to reduce moral hazard behavior at all banks, not just the banks sanctioned. We develop a new theoretical framework to link enforcement actions with bank behavior through corporate culture. Using a sample of enforcement actions in the US between 2006 and 2013, we find empirical evidence that supervisory actions influence bank behavior at both sanctioned and non-sanctioned banks and corporate culture plays an important role in moderating this relationship.

Area: Banking

Keywords: Enforcement actions, Bank Supervision, Corporate culture, Risk-taking, Lending

Paper file

University Network