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Does business regulation matter for banks in the European Union?
journal contribution
posted on 2023-06-08, 22:12 authored by Emmanuel Mamatzakis, Antonios Nikolaos KalyvasThis paper provides a comprehensive analysis of the impact of business and financial specific regulations on banks in the EU-27 over the 2004–2010 period. We employ a dataset of a wide range of business regulation indices from the “Doing Business” project of the World Bank. Results for the credit regulation indices show that the strength of creditor rights is negatively related to bank performance as measured by cost efficiency, although this effect subdues during the recent crisis period (2008–2010). On the other hand, credit information sharing improves efficiency, a result that is further strengthened during the crisis. Tax-compliance costs and entry regulation constrain bank efficiency. More stringent regulation of labour, in terms of minimum wage and dismissal costs, and insolvency regulation are positively associated with efficiency. Furthermore, regulation that protects investors from management expropriation, such as the extent of director liability, exerts a positive impact on bank efficiency and more so in the crisis years. Finally, we use interaction terms between the business regulation variables and institutional quality as measured by the rule of law and control of corruption. Results show that there are cases that institutional quality influences the individual effects of specific types of business regulation on bank efficiency.
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Publication status
- Published
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- Published version
Journal
International Review of Financial AnalysisISSN
1057-5219Publisher
ElsevierExternal DOI
Volume
32Page range
278-324Department affiliated with
- Business and Management Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2015-08-25First Compliant Deposit (FCD) Date
2015-08-24Usage metrics
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