This dissertation provides new empirical evidence on the costs, and benefits of European Union-wide supervisory programs that are incorporated in the aftermath of the Financial Crisis, and subsequent European Sovereign Debt Crisis. In particular, the dissertation focuses on EU-wide stress test exercises, conducted by the European Banking Authority (EBA), and on the European Banking Union wherewith the supervision of “significant” Euro area banks moves from national authorities to the supranational European Central Bank (ECB). The dissertation analyses multiple data sets related to European banks, and European countries, most importantly, market data from 2010 to 2018, and bank balance sheet data from 2008 to 2017.

This dissertation explores three research questions. First, I investigate if the shift in institutional mandates that follows the European Banking Union impacts the efficacy of macro-prudential stress test exercises to produce new, and relevant information to market participants. Second, I analyze real effects of the incorporation of EU-wide stress test exercises on the loan supply to the economy. Third, I investigate the real effects of the European Banking Union on the interbank lending activity of “significant”, ECB-supervised banks.

Overall, this dissertation sheds new light on the success or failure of European supervisory programs to achieve the goals that EU authorities predefined to enhance financial stability. It has important implications on the design choices for such programs, as well as on multiple stakeholders, the banking industry, bank supervisors, bank regulators, bank investors or creditors, and the real economy.