Template-Type: ReDIF-Paper 1.0
Author-Name: Hans Degryse
Author-X-Name-First: Hans
Author-X-Name-Last: Degryse
Author-Name: Cédric Huylebroek
Author-X-Name-First: Cédric
Author-X-Name-Last: Huylebroek
Author-Name: Bernardus F Nazar Van Doornik
Author-X-Name-First: Bernardus F Nazar
Author-X-Name-Last: Van Doornik
Title: The disciplining effect of bank supervision: evidence from SupTech
Abstract: Regulators increasingly rely on supervisory technologies (SupTech) to enhance bank supervision, but their potential role in disciplining bank behavior remains unclear. We address this knowledge gap using unique data from the SupTech application of the Central Bank of Brazil. We show that, after a SupTech event, banks reveal inconsistencies in their risk reporting and tighten credit to less creditworthy firms, effectively reducing risk-taking. This credit tightening in turn has small spillovers on less creditworthy firms borrowing from affected banks. Our results can be explained by a moral suasion channel, offering novel insights into the role of SupTech in bank supervision.
Creation-Date: 2025-04
File-URL: https://www.bis.org/publ/work1256.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1256.htm
File-Format: text/html
Number: 1256
Keywords: bank supervision, SupTech, bank risk-taking, bank lending, real effects
Classification-JEL: G21, G28
Handle: RePEc:bis:biswps:1256