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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | Real Effects of Supervisory Enforcement Actions on Bank Performance: Evidence from China |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 43 |
| Date | 2023 |
| Abstract Text | This thesis aims to provide insights into effects of supervisory enforcement actions (EAs) on various aspects of bank performance. To achieve this, a comprehensive dataset encompassing bank performance metrics and regulatory enforcement actions in China from the period 2002 to 2022 is utilized for quantitative analyses. The research begins with a two-way fixed effect Ordinary Least Squares (OLS) model to identify the effects on key variables related to bank performance. Subsequently, the study employs the event study methodology to compare the performance of banks before and after the implementation of EAs. Baseline results reveal that EAs have notable effects on bank behavior. Specifically, EAs are found to (1)limit banks’ asset expansion, (2)decrease the profitability of punished banks and (3)improve capital adequacy of affected banks. Besides, banks subject to EAs exhibit worse loan quality and structure compared to unaffected banks. These effects are amplified in cases where banks are subject to severe EAs. Event study findings suggest that the effects of EAs usually lasts for on more than two years. Moreover, the analysis captures some pre-treatment effects, providing additional insights into the anticipation and response of banks to impending regulatory actions. |
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