The More the Merrier? Detecting Impacts of Bank Regulation After the Global Financial Crisis

Christian Kalhoefer and Guenter Lang ()
Additional contact information
Christian Kalhoefer: ADG Business School/Steinbeis University, 56410 Montabaur, Germany
Guenter Lang: Kuehne Logistics University, 20457 Hamburg, Germany

Credit and Capital Markets, 2019, vol. 52, issue 2, 191-212

Abstract: Governments worldwide reacted swiftly to the global financial crisis by tougher regulations. This paper investigates the impacts of the regulatory environment on operating costs using panel data of 2,200 German banks over the timeframe from 1999 to 2014. We estimate cost functions with and without proxies for regulation and analyze the results with respect to period, bank size, and group affiliation. Our results show that regulatory costs were peaking in 2001, 2008, and lately since 2012. Most interesting, however, is the asymmetry of regulation: Whereas the cost effects were symmetric for all banks until 2003, the last ten years were different. Larger institutions and savings banks could neutralize the impacts of increasing regulation on operating costs. In contrast, smaller banks, especially if they are cooperative banks, were facing significant cost increases. We therefore expect unintended structural shifts like a reduction in the diversity of banks, which are negative for competition, service quality, and for the stability of the financial system.

JEL-codes: G21 G38 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: https://EconPapers.repec.org/RePEc:kuk:journl:v:52:y:2019:i:2:p:191-212

Access Statistics for this article

More articles in Credit and Capital Markets from Credit and Capital Markets
Bibliographic data for series maintained by Credit and Capital Markets ().