Tighter supervision improves bank performance – NY Fed paper

New York skyscrapers and flag

Tightly supervised banks perform notably better across a full business cycle than less heavily regulated banks, research published by the Federal Reserve Bank of New York finds.

“In normal times, the benefits are smaller, but during downturns the more closely supervised firms exhibit better loan performance and lower earnings volatility,” Uyanga Byambaa et al find.

The researchers compare the five banks most tightly supervised by the Fed with banks that receive less supervision. They examine

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