Abstract
The paper studies the relationship between competition and supervisory enforcement actions.
Employing a unique dataset for the 2006–2018 period, we find that the probability of receiving a sanction decreases as a bank’s market power increases.
Furthermore, an enforcement action subsequently increases the level of competition.
We ensure that these results are robust across bank competition measures and account for endogeneity concerns by employing instrumental variable strategies (IV-Probit and 2SLS).
Short bio
Matteo Cotugno is an Associate Professor of Financial Markets and Institutions at the Department of Management, University of Bologna (from 2019).
He received a PhD in Banking and Finance from the University of Rome “Tor Vergata” and he was a post-doctoral fellow at the University of Bologna.
His research has been published on highly ranked journals such as the Journal Banking and Finance, the Applied Financial Economics and the Corporate Governance: an international Review.
His research interests are in the field of corporate governance in banking, banking supervision, and relationship lending.