Investigation of the effects of financial regulation and supervision on bank stability: The application of CAMELS-DEA to quantile regressions

Ali Shaddady and Tomoe Moore

Journal of International Financial Markets, Institutions and Money, 2019, vol. 58, issue C, 96-116

Abstract: We rigorously investigate the multifaceted effects of financial regulation and supervision on bank stability using panel data for 2210 banks across 47 European countries over the period 2000–2016. The CAMELS rating system is applied to quantile regressions. We find that greater capital regulation is positively associated with bank stability, whilst tighter restrictions, deposit insurance and excess of supervision appear to exert an adverse effect on bank stability. These effects are more pronounced among banks at a higher level of stability. It also appears that commercial banks, smaller banks and banks in emerging countries are relatively sensitive to regulatory shocks.

Keywords: Bank stability; Financial regulation; Bank supervision; CAMELS; Quantile approach (search for similar items in EconPapers)
JEL-codes: G21 G24 G28 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:58:y:2019:i:c:p:96-116

DOI: 10.1016/j.intfin.2018.09.006

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