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How effective are banking regulations on banking performance and risk? Evidence from selected European countries

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  • Bouteska, Ahmed
  • Büyükoğlu, Burak
  • Ekşi, Ibrahim Halil

Abstract

The study examined the impact of capital requirements, activity restrictions, and supervisory powers on bank performance and risk. Within this framework, a GMM system analysis was conducted using data from 136 deposit banks operating in 28 European countries between 2011 and 2020. As a result of the analysis, it has been determined that activity restrictions and capital requirements have a negative effect on performance, while supervisory powers have a positive effect. In addition, it has been found that capital requirements and supervision are inversely related to credit risk.

Suggested Citation

  • Bouteska, Ahmed & Büyükoğlu, Burak & Ekşi, Ibrahim Halil, 2023. "How effective are banking regulations on banking performance and risk? Evidence from selected European countries," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322007802
    DOI: 10.1016/j.frl.2022.103604
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    1. Nilufer Ozdemir & Cuneyt Altinoz, 2024. "How do Bank Profits Change in Response to Changes in Interest Rates?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 30(3), pages 315-325, August.

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    More about this item

    Keywords

    Banking regulations; Banking performance; Banking risk;
    All these keywords.

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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