Economics at your fingertips  

Regulation and supervision of the European banking industry. Does one size fit all?

Małgorzata Iwanicz-Drozdowska () and Bartosz Witkowski

Journal of Policy Modeling, 2022, vol. 44, issue 1, 113-129

Abstract: Post-global financial crisis (GFC) regulatory overhauls – where uniform solutions were adopted for various types of banks – have significantly changed the environment in which banks operate. This is especially visible in the European banking industry, whose profitability has not recovered to pre-GFC levels. Therefore, our goal is to investigate whether the determinants of bank profitability fit these uniform solutions. Accordingly, we explore the profitability of European banks in various settings from 2012 to 2016, which is the period marked by tough reforms. Since a decrease in profit may be treated as a sign of financial difficulties, we model static (i.e., loss) and dynamized (i.e., loss, moderate and severe decreases in profits) indicators of bank situations based on a sample of approximately 6700 bank-year observations. Different patterns of the determinants of profit decreases are found among different types and sizes of banks. Moreover, the determinants of loss events apparently differ from those accounting for profit decreases. These findings underline that a “one-size-fits-all” approach to regulation and supervision is not adequate for market realities.

Keywords: Profits; Loss occurrence; Deterioration of profits; Regulation; Supervision (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.jpolmod.2021.09.008

Access Statistics for this article

Journal of Policy Modeling is currently edited by A. M. Costa

More articles in Journal of Policy Modeling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2024-02-12
Handle: RePEc:eee:jpolmo:v:44:y:2022:i:1:p:113-129