How bank regulations impact efficiency and performance?

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Abstract

This study examines the impact of regulation, and other micro- and macroeconomic factors on banks' productivity growth, in an international sample of 2,155 banks from 93 countries. Results show that high capital requirements enhance productivity growth in North and Latin American banks, but not in European, African or Asian banks. Supervisory powers drive bank productivity
growth in all regions except Europe and Central Asia. Restrictions on real estate, insurance, and securities activities impede productivity change in all Income level groups but not in High-Income Economies. Our results also show that market volatility and Z-score drive technological change and scale efficiency growth, but negatively impact pure technical efficiency.
Original languageEnglish
JournalJournal of Financial Economic Policy
DOIs
Publication statusPublished - 17 Nov 2019

Keywords

  • Bank regulation, Supervision
  • Total Factor Productivity
  • EFFICIENCY
  • Basel Accords
  • Financial crisis impact
  • Financial Stability

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