Abstract
I examine the effectiveness of off-site bank examinations by using the natural experiment during COVID-19. Exploiting the difference in the amount of soft information and in the effect of the change to off-site examination between the banks far from the supervisory field office and those near the field office, I find that distant banks increase asset risk regarding RWA to asset ratio and become less conservative in anticipating or preparing for future losses from loan portfolios. I also show that distant banks that adjust the loan portfolio to be riskier are less profitable, and the effect is prominent among the less-capitalized banks. My findings suggest that on-site examination plays a vital role in preventing banks from taking more risk in their asset portfolios.
Committee Chair
Taylor Begley
Committee Members
Taylor Begley, Asaf Manela, Anjan Thakor,
Degree
Doctor of Business Administration (DBA)
Author's Department
Finance
Document Type
Dissertation
Date of Award
Summer 8-15-2022
Language
English (en)
Recommended Citation
Shin, Whan Kyu, "The Effect of Off-Site Examination: A Natural Experiment After COVID-19" (2022). Olin Business School Theses and Dissertations. 7.
The definitive version is available at https://doi.org/10.7936/cnhd-m273