Bank regulation and systemic risk: cross country evidence

Chen, Lei; Li, Hui; Liu, Frank Hong; Yue, Zhou

doi:10.1007/s11156-020-00947-0

Cited by 14 publications

(7 citation statements)

References 48 publications

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“…Ter-Mkrtchyan and Franklin (2019) studied how the levels of countries' economic development, political stability, regulation quality and rule of law influenced the stability of their financial systems. Effects of banking regulations on financial stability have also been investigated by Atellu, Muriu, and Sule (2021), Chen, Li, Liu, and Zhou (2021), Kočišova (2020) and Crockett (1996). Naceur, Candelon, and The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland 674 Lajaunie (2019) attempted to estimate the impact of countries' financial development levels on their financial stability.…”

Section: Literature Reviewmentioning

confidence: 99%

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Mikita¹

2022

ERSJ

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Purpose: This article aims to assess the impact of the efficiency of the banking sector and its concentration level on the stability of the banking system in Poland. Design/Methodology/Approach: The impact assessment relies on correlation and regression analysis. The stability of the banking sector is expressed in Z-Score indicator. The assessment of banking efficiency is based on the Return on Equity (ROE) after tax and on the bank cost-to-income ratio. The concentration level is shown as the share of the assets of Poland's three largest commercial banks in the total assets of the banking sector. The calculations are based on panel data for the banking sector in Poland, for the period 1996-2017. Findings: The results obtained suggest a positive influence of the return on equity after tax of the banking sector on the stability of Poland's banking sector and no relationship between the stability of the banking sector and the level of its concentration or the bank cost-toincome ratio.Practical Implications: Identification of the factors determining the stability of the banking system may contribute to its increase, and thus reduce the likelihood of banking crises. Ultimately, this will translate into an increase in the stability of the entire financial system as well as an increase in the stability of the entire economy. Originality/Value: The paper contains the author's original research into stability of banking system in Poland. The study will contribute to the development of theories concerning factors of the stability of the banking system.

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Section: Literature Reviewmentioning

confidence: 99%

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Mikita¹

2022

ERSJ

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“…Banks may also face activity restrictions with implications on efficiency and economies of scope. Whereas Indonesia, Japan and many SSA countries impose severe restrictions on bank activity, United Kingdom, Austria, Switzerland and Germany impose minimal restrictions (Chen et al, 2020). Moreover, defaults on loan are a major hindrance to bank lending when regulation quality is poor (Andrianova et al, 2015).…”

Section: Related Literaturementioning

confidence: 99%

Does the Quality of Institutions Matter for Financial Inclusion? Cross Country Evidence

Muriu¹

2021

IJEF

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Despite evidence on the importance of financial inclusion, little is known about the role of institutions in fostering inclusion partly because of data availability. Using annual data corresponding to 120 countries for the period 2004-2019, this study investigates country institutional characteristics associated with the ownership of deposit accounts. A standard regression model is estimated using fixed effects panel data techniques along with financial inclusion proxy and three measures of institutional quality. This paper provides the first empirical justification that financial inclusion is non-negligibly driven by the institutional context. Specifically, rule of law and quality of regulations are crucial in enhancing financial inclusiveness, more so in Africa where they have a stronger effect relative to other regions. Banks and depositors in Africa may be operating in an environment characterized by weak legal systems and excessive or challenging regulations. The evidence presented in this paper may therefore help with the sequencing of institutional reforms that could promote financial inclusion.

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“…The New York University Stern School Vlab SRISK documentation reports that "By default, the prudential capital requirement used in calculating such capital shortfalls is set to be 8% for firms in Africa, Asia and Americas and 5.5% for firms in Europe due to differences in accounting standards" (https://vlab.stern.nyu.edu/docs/srisk (accessed on 27 June 2021)). The scientific literature instead typically sets the minimum capital requirement to 8%, see, e.g., Brownlees and Engle (2017), Berger et al (2019), andChen et al (2021) thus we kept this setting as reference for the estimations.…”

Section: Notesmentioning

confidence: 99%

Modeling and Simulating Cross Country Banking Contagion Risks

Zedda

Spinace-Casale

2021

JRFM

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The recent financial crisis proved that financial contagion could spread among countries resulting in disruptive effects. In this paper, by modeling and simulating banking system behavior and linkages across countries, we assess, based on data from the BIS and IMF, the possible outcome of domestic crises and how contagion spreads over countries. Results allow detailing the role of a “lighter” or of a “fueler” of financial crises for each country and assessing how each country can affect each other country by contagion, signaling the importance of financial interdependence between some neighboring countries, and detailing which counterpart country would be affected by the ring-fencing of each considered country’s banking system. The method also allows for what-if analyses to optimize the risk exposures, and to plan an emergency strategy in case of alarms coming from specific countries.

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Bank regulation and systemic risk: cross country evidence

Cited by 14 publications

References 48 publications

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Does the Quality of Institutions Matter for Financial Inclusion? Cross Country Evidence

Modeling and Simulating Cross Country Banking Contagion Risks

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