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Regular version of the site
ФКН

ICEF/LFE Research Seminar by Lucy Chernykh (Clemson University)

On Thursday, December 18 at 4.40 pm, room 3211  (Shabolovka str. 26) ICEF and LFE held the Research Seminar.
Speaker: Lucy Chernykh (Clemson University)
Theme: "Bank Bailouts with On-site Monitors: Evidence from a Regulatory Experiment"

Abstract: I use unique supervisory intervention – introduction of de novo Resident Examiners in large, systemically important Russian banks that received sizeable government aid - to study the causal effect of on-site monitoring regime on a bank behavior in crisis. By exploiting broad variation in the timing and duration of resident examiners’ assignments & withdrawals and detailed monthly data on bank asset choices during pre-treatment, treatment and post-treatment periods, I find that on-site monitors perform a dual role. From one standpoint, they increase bailed-out banks’ loan supply in crisis through inducing better capitalized banks to lend more,  promoting allocation of government aid funds in domestic business loans and limiting investment in selected foreign assets. From another standpoint, the resident examiners restrict bank risk, as their appointment is associated with shrinking lending activity by banks with higher accumulated bad loans and with immediate build-up of loss reserve cushions. These findings reveal an examiner’s ability to align credit supply and risk-restricting agendas in bank monitoring.  They also contribute to the ongoing academic and regulatory debate on the optimal design of a bailout policy and enhanced supervisory powers in crisis.


Forthcoming seminars

Past seminar