How are regulatory efficiency and financial development interlinked?

Júlio Bastos, Claudio Oliveira De Moraes and Micheli Gargalhone

Journal of Economic Studies, 2025, vol. 53, issue 2, 243-255

Abstract: PurposeThis article aims to analyze the impact of regulatory efficiency on the financial depth, financial access and financial efficiency of a set of 44 countries for the period from 2010 to 2019.Design/methodology/approachThis article proposes an original measure of relative efficiency called regulatory efficiency, using data envelopment analysis that shows the optimal relationship between regulatory capital and credit in a group of countries. Furthermore, this article estimates through the S-GMM method the effects of regulatory efficiency on financial depth, financial access and financial efficiency.FindingsThe results indicate that countries whose financial system optimizes the capital-bank credit ratio have more financial depth, financial access and financial efficiency, which are very important for financial development and, therefore, are of interest to economic policies.Originality/valueFaced with the dilemma of this trade-off, this article proposes an original measure of relative efficiency called regulatory efficiency that shows the optimal relationship between regulatory capital and credit, which are very important for financial development and, therefore, are of interest to economic policies.

Keywords: Regulatory efficiency; Financial depth; Financial access; Financial efficiency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-12-2024-0844

DOI: 10.1108/JES-12-2024-0844

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