ssm的适宜性和适当性工作对银行绩效的重要性——来自10年ssm工作的证据

The importance of the SSM’s fitnessand propriety work for banks’performance–evidence from 10years of SSM work Vivian van Breemen,Francesca Faella,Christopher Scheins,Claudia Schwarz Disclaimer:Thispaper should not be reported as representing the views of the European Central Bank(ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. Abstract In this paper, we empirically investigate how suitability concerns detected by the SSMin the fitness and propriety of management body appointees impact the performance ofEuropean banks in the period 2014-2023. We provide evidence that management bodyappointees where the assessment of the supervisory authorities raised concerns, had anegative impact on the bank’s future performance. The negative effect can be attributed toappointees where the supervisory assessment revealed such severe concerns that ancillarymeasures were imposed.These results outline the importance of the SSM’s work forsafeguarding the quality of bank’s corporate governance and suggest that the Supervisorsseem to be effective in pointing out those appointees that exhibit severe concerns. In addition,we find that the designation of female appointees by supervised entities increased the bank’sperformance sustainably. This result indicates that stimulating diversity, in terms of gender, inthe management bodies of banks positively contributed to bank performance. Keywords:management body appointees, banking supervision, ancillary measures. JEL classifications:G21, G28, G30, M14. Non-technical summary Strong and effective governance of banks is pivotal for appropriate risk managementpractices which ensure the soundness of banks and safeguard global financial stability. Goodbank boards also exhibit better performance in terms of their profitability, which is commonlymeasured using the return on assets (ROA). Supervisors and regulators have introduced rules and regulation to ensure that banks’management bodies are managed by good and suitable members, which is key to foster ahealthy governance culture in banks. While banks are empowered to select their ownmanagement bodies, the ECB together with national competent authorities (NCAs) (the SSMhenceforth) are responsible for assessing the fitness and propriety of banks’ managementbodies and approving the appointment. The SSM may request the entity or appointee to takecertain remediation actions in case it has concerns regarding the appointment. In case of verysevere concerns, the SSM may also reject an appointment. Therefore, Supervisors are thegatekeepers for the entrance to management boards of their supervised entities. This raises the question whether these supervisory actions are effective and positivelycontributing to ensuring a safe and sound banking sector. To investigate this, we analyse15,537 management body appointees of European banks that have been assessed by theSSM from 2014 to 2023. We find that management body appointees with suitability concerns had a negativeimpact on the bank’s performance. We see that this is driven mainly by concerns regardingpotential conflicts of interest and experience of the appointee. Further, we show that whencontrolling for those appointees with severe concerns (i.e. having received an ancillarymeasure by the Supervisor), the effect for appointees with non-severe concerns vanishes.While we do not find a negative effect from appointees that received a legally binding measurefor remediation of identified concerns, interestingly, especially appointees that have receiveda non-binding ancillary recommendation tend to have negative effects on the RoA of the bank.This is hinting at an effective and swift remediation when supervisors act more forcefully. It isnoted that the ECB has changed its framework for ancillary measures to make use of thelegally binding measures whenever possible under EU and national law. When looking at gender diversity, we do not find any difference between female andmale appointees with concerns. However, in general, female appointees tend to have a positive significant impact on the bank’s performance. Our findings highlight the importance ofhaving diversified boards with appointees that do not have severe concerns. Additionally, weshow that appointees flagged with concerns tend to reduce their bank’s risk-taking, likely inresponse to heightened supervisory scrutiny. Nevertheless, even after accounting for this moreconservative approach, their banks continue to experience a decline in profitability. These new insights are notonly relevant for banks that tend to optimise theirprofitability, but also for banking supervisors. 1.Introduction Strong and effective governance of banks is pivotal for appropriate risk managementpractices which ensure the soundness of banks and safeguard global financial stability.Especially in nowadays fast changing environment, banks’ governance plays a crucial role inshielding them against future crises and ens