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Regulations and productivity growth in banking

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Author Info
Delis, Manthos D
Molyneux, Philip
Pasiouras, Fotios

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Abstract

This paper examines the relationship between the regulatory and supervision framework and the productivity of banks in 22 countries over the period 1999-2006. We follow a semi-parametric two-step approach that combines Malmquist index estimates with bootstrap regressions. The results indicate that regulations and incentives that promote private monitoring have a positive impact on productivity. Restrictions on banks’ activities relating to their involvement in securities, insurance, real estate and ownership of non-financial firms also have a positive impact. However, regulations relating to the first and second pillars of Basel II, namely capital requirements and official supervisory power do not appear to have a statistically significant impact on productivity.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13891.

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Date of creation: 07 Feb 2009
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Handle: RePEc:pra:mprapa:13891

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Related research
Keywords: Banks; Basel II; Productivity; Regulations;

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages

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