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Banking regulation and bank performance in the EU – what should be the scope of the regulatory reform?

Author

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  • Katarzyna Sum

    (Warsaw School of Economics, Chair of International Finance)

Abstract
This study is aimed at investigating the link between banking regulation and bank performance in EU countries during the sample period 2005−2014. It covers 929 banks from 27 EU countries. The three main contributions of the study are: the analysis of banking regulations and their changes in 2003, 2008 and 2012, the investigation of their mutual relation with bank performance in 2005−2014, as well as the analysis of intertemporal effects and endogeneity between the post-crisis changes of regulations and bank performance. Contrary to the results of previous studies, the analysis conducted in this paper suggests that national banking regulations had a significant impact on individual bank performance. Also, the results show that some unregulated bank characteristics, i.e. individual and systemic bank size may influence bank performance significantly. The obtained results have implications for the ongoing discussion about the banking regulatory reform in EU countries.

Suggested Citation

  • Katarzyna Sum, 2015. "Banking regulation and bank performance in the EU – what should be the scope of the regulatory reform?," Bank i Kredyt, Narodowy Bank Polski, vol. 46(3), pages 207-236.
    • Handle: RePEc:nbp:nbpbik:v:46:y:2015:i:3:p:207-236
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    File URL: https://bankikredyt.nbp.pl/content/2015/03/bik_03_2015_02_art.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    banking regulation; banking supervision; bank performance; banking system soundness; EU banking;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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