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This paper aims to examine the impact of bank regulation and supervision on financial stability. Financial sector reform, especially in developing countries, takes the form of a sudden adjustment in regulation and supervision. The main objective of the paper is to examine whether this fast and sudden adjustment in regulation and supervision has an undesirable impact on financial stability. Furthermore, the paper examines the role of real economic development in determining the impact of financial reform on financial stability.

Empirically, on a sample of 57 developing countries over the period 2000-2013, the author explored the impact of bank regulation and supervision on financial stability for different sub-groups of countries. The division is based on the real level of economic development and, most importantly, on the speed of adjustment in regulation and supervision. The study uses the cross-sectional–ordinary least square model. Each country has three observations (average 2000-2004, average 2005-2008 and average 2009-2013), which are convenient, with the date of the three surveys on regulation and supervision (2002-2006-2011). The period of the averages is selected to cover periods before and after the survey as regulation and supervision may be adopted before the survey and as its impact may persist for the period after.

The major finding of this study is that it supports the important role of the speed of adjustment in regulation and supervision, and its impact on financial stability. Soft adjustment in regulation and supervision has more positive impact on financial stability than fast adjustment. Activity restrictions have positive and significant impact on financial stability in soft adjustment countries’ group. On the other hand, in countries with fast adjustment, results show negative and statistically significant impact on financial stability, especially for supervisory independence. More time is needed for supervisors to adapt to new regulation and supervision and gain expertise to monitor financial condition of banks in a consistent manner. Results also show that the level of economic development is an important factor when testing the impact of regulation and supervision on financial stability. In lower income countries, more room is available for corruption in lending, which has a negative impact on financial stability.

This study advocates the necessity of taking the speed of adjustment in regulation and supervision by policymakers in developing countries, while initiating reform in the financial sector. Financial sector reform that takes the form of a sudden adjustment in regulation and supervision may have undesirable results in terms of financial stability. On the other hand, soft adjustment in regulation and supervision, which gives more room for supervisors to adapt and gain expertise, may have more positive impact on financial stability.

This paper is the first paper to explore new methods of calculating the speed of adjustment in regulation and supervision, and to examine whether the high speed of financial reform in developing countries has an undesirable impact on financial stability.

In this paper, the authors examine the association between the banking regulatory regime and the quality of bank earnings. We further investigate whether the banking agency regulatory characteristics moderate the association between banking regulation and earnings quality.

Using panel data spanning 29 years over the period 1991 to 2019, the authors model bank earnings quality as a function of scores for banking regulation for 170 banks in the East African region using both the feasible generalized least squares (FGLS) and generalized method of moments (GMM) estimation methods.

The results, which are robust for endogeneity among other checks, reveal a positive impact of bank regulatory mechanisms on the quality of bank earnings. The authors further establish differential impact of specific regulatory mechanisms, with some contributing positively toward earnings management while others contributing negatively toward earnings management. The differential impacts of banking regulation on earnings quality are also manifested in the country-level analyses.

First, the study utilises a mix of bank-specific, country-specific as well as economy-specific variables in one dataset. Second, the authors utilise survey-based data using the World Bank's Bank Regulation and Supervision Surveys (BRSS) for the periods 1999 to 2019. The authors assume that the bank regulatory mechanisms in place pre-1999 are close to the mechanisms in place as per the 1999 BRSS. Given limitations in data availability, the authors are not able to control for banks engaging in multiple activities such as insurance, underwriting of securities, FinTechs, among others.

The results are useful in bridging the gap between theory and practice regarding the expected effect of strict banking regulations on the quality of earnings in Eastern African Banks. For the positive impact of banking regulation on bank earnings quality to be felt, the institutional, social and environmental specificities of the five selected countries need to be adequately developed and taken into consideration.

This study is perhaps the first to utilise a large dataset of commercial banks from countries in a developing region characterised by relatively lower enforcement and dynamism in the banking regulation. Further, in-depth studies on the association between banking regulation and earnings quality remain sparse.

The purpose of this study is to examine how banking regulation and supervision affect the performance of microfinance institutions (MFIs). It proposes performance of the MFIs from the aspect of social and financial efficiency because the MFIs nowadays not only view to sustain the social role of poverty eradication but in the same time they must strive the financial sustainability to maintain the operation in long run. This study also includes the macroeconomic condition and firm level variables to control for social and financial efficiency of the MFIs.

The data consists 168 MFIs from five countries in Southeast Asia from year 2011 to 2017. First stage of analysis is to identify level of social and financial efficiency by using data envelopment analysis approach. Second stage is to examine impact of bank regulation and supervision to the social and financial efficiency by applying panel regression analysis and generalized method of moments for robust estimation methods.

The finding shows the MFIs own lower social efficiency and higher score in financial efficiency. This indicates in pursuing financial sustainability, the MFIs in Southeast Asia countries have lost sight of their original mission of poverty reduction. Furthermore, the result also presents a significant impact of bank regulation and supervision to the social and financial efficiency of the MFIs. However, the results appear in different direction when more negative effect is associated with social efficiency. This specifies that bank regulation and supervision are not appropriate to accommodate the social needs, thus hampering the effort of poverty reduction by the MFIs.

The present study only concentrates on the impact bank regulation and supervision to the performance of the MFIs. As the operation of the MFIs currently has been largely exposed in banking operation, it is suggested that future studies to look for other special issues such as country governance that might influence specifically in social and financial aspect of the MFIs.

The empirical findings from this study could be useful and may have significant implications for the regulators. The regulators or policymakers could establish the new regulation framework that fulfil the dual needs (social and financial) of the MFIs. Furthermore, the empirical findings also could serve as guidance to regulators and decision-makers in designing new policies for a sustainable and competitive sector of the MFIs. Although the MFIs recently brings a similar role as commercial banks, they need to retain the social aspects as that is the original mission of the MFIs

The present study proves that the bank regulation and supervision have brought a significant influence to the performance of the MFIs in ASEAN 5 countries.

This paper aims to assess the topography of financial regulation, supervisory styles and performance of banking systems across the world.

The author gains insights by comparing regulatory and supervisory practices and their impact on banking system performance before and after the global crisis. The study illustrates the differences in regulation/supervision among crisis, non-crisis and BRICS countries. Even as capital ratios increased, bank governance and supervision regimes were strengthened, the private sector incentives to monitor banks deteriorated.

The results show that the crisis-countries had weaker regulatory and supervisory frameworks than those in emerging countries during the crisis period. BRICS countries as a distinct block have demonstrated uniqueness in their regulatory/supervisory styles that are similar neither to those in the crisis-countries nor to those in the non-crisis countries.

The originality of this study lies in its unique approach to assessing the bank regulation and supervision styles around the world and their impact on banking system profitability, as it uses a robust database. Further, this study provides not only a general assessment but also a comparative analysis of the BRICS and emerging economies. Regulatory agencies around the world would greatly benefit from systematic evidence on the relationship between bank performance and regulatory/supervisory systems.

This paper aims to find the effects of regulatory and supervisory policies on bank risk-taking. The same regulation and supervision have different effects on bank risk-taking depending on influence factors. These factors were considered and a sample of the largest European banks from France, Germany, UK, Italy, Spain and Greece was used over the period 2005-2011.

In this paper, the author analyses the effects of regulation and supervision on risk-taking. The author uses a sample of the biggest banks from six European countries (France, UK, Germany, Italy, Spain and Greece) over the period 2005-2011. Because the applicable entry of IFRS was in 2005, thus data of European banks are not available before this date. For each country in the sample, the 10 largest banks (defined by total assets) that lend money to firms were identified. The author does not include central banks or postal banks, which generally do not lend money to firms and are described as non-banking institutions (La Porta et al., 2002).

It was found that restrictions on bank activities, supervisors’ power and capital adequacy decrease risk-taking. Thus, regulation and supervision enhance bank’s stability. While, deposit insurance increases the risk due to its association to moral hazard. Finally, it was found that strengthening regulatory and supervisory framework raises the risk-taking and weakens the stability of European banks.

The author contributes to existing empirical analyses in three ways. First, the existing literature has drawn a lot of attention on US banks. However, the purpose of this paper is to examine the biggest banks of three European leaders (France, Germany and UK) and three more European countries influenced by the recent crisis (Spain, Italy and Greece) over the period 2005-2011. Second, most studies focus mainly on the relationship between regulation and profitability, yet seldom on the relationship between regulation, supervision and risk-taking. The author focuses on this relationship. Third, this study applies the two-step dynamic panel data approach suggested by Blundell and Bond (1998) and also uses dynamic panel generalized method of moments (GMM) method to address potential problems. The two-step GMM estimator that the author uses is generally the most efficient.

This paper aims to examine whether bank regulation, supervision and monitoring enhance or impede technical efficiency and risk‐taking behaviour of Islamic banks across the globe.

Technical efficiency scores are calculated using the data envelopment analysis (DEA) model while simultaneity between banks' supervision and regulation on risk and efficiency estimates are calculated using the seemingly unrelated regression (SUR) approach.

The author's results suggest that regulations and strict monitoring of banking operation, and higher supervisory power of the authorities, increase the technical efficiency for Islamic banks. The opposite effect is observed in the case of risk‐taking behaviour of Islamic banks, with higher restrictions resulting in a reduction in risk taking of Islamic banks.

The Basel II & Basel III guidelines suggested that stricter regulations and supervision could hamper banking efficiency. The existence of a powerful supervisory body could also lead to the inefficiency of banks. The DEA scores from this paper suggest that this may not necessarily be the case, especially as Islamic banks appear to be technically efficient in stricter regulatory conditions.

A message that emerges from this analysis is that there is a strong link between Islamic bank technical efficiency and risk‐taking behaviour with the Central Bank regulatory and supervisory policies. It is also conclusive that the Islamic banking system works well within a stricter regulatory environment.

Aims to review the potential risks associated with the separation of banking regulation from the orbit of the central bank in Latin‐American and Caribbean countries (LAC).

Sets out information on the banking regulators in LAC and on the current degree of involvement of the central bank in banking regulation; the main monetary policy issues connected to the separation of banking regulation from the central bank; and the main banking regulation issues involved.

The separation of banking regulation from the central bank would not present any great danger to LAC currently. However, the need to conduct the move in accordance with best principles must be emphasized.

Given the fertile ground offered by the countries of LAC, this paper presents arguably the most comprehensive examination to date of this “hot potato”.

In recent years, the central monetary authorities of some Gulf Cooperation Council countries have made several regulatory changes in order to achieve social & economic goals. The monetary authorities of these countries have strengthened prudential norms. Asset classifications and provisioning norms have moved closer to international standards. Banks are required to maintain capital to risk weighted assets ratios of 8 per cent required by the BIS. Local banks follow International Accounting Standards. Although the central monetary authorities of the GCC countries are active in supervising and monitoring their regulations on financial institutions, but not in a rapid way. In a global financial market, Islamic‐banking regulators that operate Islamic banks should think about the compatibility of the regulatory setting. Through a deep understanding of the nature of the Islamic banking business and the recent western banking supervisory framework, Islamic banking regulators will be able to develop a sound banking system without loosing its own distinction.

This paper describes the problems of bank regulation and supervision found in Tanzania, Uganda and Zambia, highlighting the institutional weaknesses facing bank regulators. It also reviews the recent banking regulation and supervision reforms designed to strengthen the regulatory and supervisory capacity of the central bank in all three countries and discusses the efficacy of the reforms in mitigating financial distress. It concludes that, while significant strides have been taken in all three countries, there is an important aspect of these reforms that needs to be addressed — the practical problem of differentiating between appropriate and inappropriate regulations for developing economies.

The purpose of this paper is to discuss and provide new data and measures of bank regulatory and supervisory policies in 180 countries from 1999 to 2011.

The authors' approach is based upon the quantification of hundreds of questions, including information on permissible bank activities, capital requirements, the powers of official supervisory agencies, information disclosure requirements, external governance mechanisms, deposit insurance, barriers to entry, and loan provisioning, to form indices of key bank regulatory and supervisory policies.

It is found that the regulation and supervision of banks varies widely across countries in many different dimensions. Furthermore, there has not been a convergence in bank regulatory regimes over the past decade despite the worst global financial crisis since the Great Depression.

The data are based on survey responses and this requires that the answers be accurate. To better ensure this is the case, several checks were made to ensure greater accuracy in all the answers. Using this database one can perform various statistical analyses in attempt to determine which bank regulatory regimes work best to promote well‐functioning banking systems.

The authors' data and measures are new and unique so as enable policy makers and researchers to examine cross‐country comparisons and analyses of changes in banking policies over time.