Banking regulations: do they matter for performance?

Ranjeeta Nayak ()
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Ranjeeta Nayak: N. C (Autonomous) College

Journal of Banking Regulation, 2021, vol. 22, issue 4, No 1, 274 pages

Abstract: Abstract This paper aims at highlighting the significance of banking regulations for the determination of bank performance (financial and risk management). From the World Bank data set, eight factors of regulatory guidelines (entry barriers, the permissibility of activities, deposit insurance scheme, capital requirement, information disclosure, supervision, external monitoring, and governance structure) across 129 countries are identified. The impact of each factor on bank performance is analyzed by applying multiple regression and stepwise regression models. The empirical findings indicate the positive impact of stringency of regulations regarding permissibility of activities and supervision on the financial performance of banks. Capital requirement stringency and external monitoring regulations negatively affect financial performance. The risk management effort of banks improves with the stringency of regulations regarding activities permitted, capital requirement, and external monitoring. All these factors influencing performance across heterogeneous banking system can pave the way towards the development of uniform global banking regulatory practices. Uniform global banking regulations can be an assured solution for the smooth functioning of banks at the international level.

Keywords: Banking regulation; Supervision; Governance; Global banking; Financial and risk management performance (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1057/s41261-021-00145-5

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