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Does Basel Compliance Matter for Bank Performance?

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  • Rym Ayadi
  • Sami Ben Naceur
  • Barbara Casu
  • Barry Quinn

Abstract

The global financial crisis underscored the importance of regulation and supervision to a well-functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enchances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the (Simar and Wilson 2007) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency.

Suggested Citation

  • Rym Ayadi & Sami Ben Naceur & Barbara Casu & Barry Quinn, 2015. "Does Basel Compliance Matter for Bank Performance?," IMF Working Papers 2015/100, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/100
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    More about this item

    Keywords

    WP; bank efficiency; bank performance; efficiency estimate; BCP compliance; input efficiency; BCP; Efficiency; Regulatory Compliance; bank concentration; Basel Core Principles; Bank regulation; Emerging and frontier financial markets; Bank supervision; Commercial banks; Global; Central and Eastern Europe; North America;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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