Regulations and productivity growth in banking

Manthos D. Delis (), Philip Molyneux () and Fotios Pasiouras ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the relationship between the regulatory and supervision framework and the productivity of banks in 22 countries over the period 1999-2006. We follow a semi-parametric two-step approach that combines Malmquist index estimates with bootstrap regressions. The results indicate that regulations and incentives that promote private monitoring have a positive impact on productivity. Restrictions on banks’ activities relating to their involvement in securities, insurance, real estate and ownership of non-financial firms also have a positive impact. However, regulations relating to the first and second pillars of Basel II, namely capital requirements and official supervisory power do not appear to have a statistically significant impact on productivity.

Keywords: Banks; Basel II; Productivity; Regulations (search for similar items in EconPapers)
JEL-codes: C14 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-eff, nep-reg and nep-rmg
Date: 2009-02-07
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:13891

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