Regulation needs effective supervision; but regulated entities may deviate with unobserved actions. For identification …, we analyze banks, exploiting ECB’s asset-quality-review (AQR) and supervisory security and credit registers. After AQR … announcement, reviewed banks reduce riskier securities and credit (also overall securities and credit supply), with largest impact …

of claims of domestic banks on debtors in other euro-area countries, and an increase is expected to lead to higher …

transforms existing financial claims against ultimate borrowers that have been originated by traditional banks. Based on … non-financial private sector had been originated by shadow banks. Consequently, dampening credit creation by the …

highlight an opposite effect: higher profitability loosens bank borrowing constraints. This enables profitable banks to take …