Regulation, Supervision, Procyclicality and Banking Profitability

Elena Margarint ()
Additional contact information
Elena Margarint: LITL - Laboratoire Interdisciplinaire des transitions de Lille - UCL FGES - Université Catholique de Lille - Faculté de gestion, économie et sciences - ICL - Institut Catholique de Lille - UCL - Université catholique de Lille - JUNIA - JUNIA - UCL - Université catholique de Lille

Post-Print from HAL

Abstract: This article investigates the impact of regulation and supervision frameworks on the profitability of the Moldovan banking sector, using all banks from the sector as the sample. The analysis yields four major findings. First, the reinforcement of restrictions on banks' activities (banking regulations) has a positive effect on the profitability of Moldovan banks. More severe restrictions (less liberalization) on banking activities are effective in reducing the risk of insolvency and, consequently, help ensure profitability. Second, the power granted to supervisors, through their interventions aimed at ensuring the proper functioning of the banks (banking supervision), does not appear to enhance bank profitability. This is because intensive supervision may impose significant compliance costs and operational constraints that materially reduce profitability. Third, the business cycle has a positive impact on the profitability of the Moldovan banking sector: during periods of economic growth, the likelihood of higher bank earnings increases. Finally, the analysis confirms that macroeconomic factors play an important role, especially in the context of procyclical financial systems. To obtain more robust results, it is crucial to consider both bank-level and country-level determinants. Moreover, in the context of macroeconomic factors, it would be interesting to further develop the research by analyzing the impact of COVID-19 and, more recently, the war in Ukraine (which began in 2022) on the profitability of Moldovan banks.

Date: 2025-08-19
References: Add references at CitEc
Citations:

Published in The B.E. journal of economic analysis & policy, 2025, 4 (4), pp.226-242. ⟨10.58567/jea04030010⟩

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:hal:journl:hal-05274178

DOI: 10.58567/jea04030010

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().