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How do joint supervisors examine financial institutions? the case of state banks

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Abstract
This paper studies what determines whether federal and state supervisors examine state banks independently or together. The results suggest that supervisors coordinate examinations in order to support states with lower budgets and capabilities and more banks to supervise. I find that states with larger budgets examine more banks independently, that they accommodate changes in the number of banks mostly through the number of examinations with a federal supervisor and that, when examining banks together, state banking departments that have earned quality accreditation are more likely to write conclusion reports separately from federal supervisors. The results also indicate that regulation impacts supervision by changing the characteristics of banks. Independent examinations decrease with branch deregulation, which is consistent with the facts that this reform consolidated banks within fewer independent firms and that state and federal supervisors are more likely to examine large and complex institutions together.

Suggested Citation

  • Marcelo Rezende, 2011. "How do joint supervisors examine financial institutions? the case of state banks," Finance and Economics Discussion Series 2011-43, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2011-43
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    Cited by:

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    2. Haritchabalet, Carole & Lepetit, Laetitia & Spinassou, Kévin & Strobel, Frank, 2017. "Bank capital regulation: Are local or central regulators better?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 49(C), pages 103-114.
    3. Ampudia, Miguel & Beck, Thorsten & Beyer, Andreas & Colliard, Jean-Edouard & Leonello, Agnese & Maddaloni, Angela & Marqués-Ibáñez, David, 2019. "The architecture of supervision," Working Paper Series 2287, European Central Bank.
    4. He, Qing & Li, Xiaoyang, 2020. "The failure of Chinese peer-to-peer lending platforms: Finance and politics," BOFIT Discussion Papers 27/2020, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. He, Qing & Li, Xiaoyang, 2021. "The failure of Chinese peer-to-peer lending platforms: Finance and politics," Journal of Corporate Finance, Elsevier, vol. 66(C).
    6. He, Qing & Li, Xiaoyang, 2020. "The failure of Chinese peer-to-peer lending platforms : Finance and politics," BOFIT Discussion Papers 27/2020, Bank of Finland, Institute for Economies in Transition.
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    Keywords

    Bank examination - United States; Bank supervision - United States;

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