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The Impact of Banking Regulation on the Emergence of Crises in Emerging Countries

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  • Rim Mekki

Abstract

In this study, we analyzed the regulatory, macroeconomic and institutional environmental effects on the probability of the emergence of banking crises in 78 emerging countries that had a fragile banking system in 1997 in a cross-sectional study using a logit model. The empirical examination validates a link between the weakness of certain regulatory and macroeconomic factors and of newly liberalized emerging market banking crises, this study want to examine weakness of regulatory and macroeconomic factors of newly liberalized, etc. banking concentration, restrictions on insurance, the financial market and the real estate sector were not related to the outbreak of banking crises in our estimates. On the basis of results, this study concludes that good regulation leads to bank stability. However, certain restrictions on inappropriate banking activity were the causes of the emergence of banking crises. As a result, the fragility of macroeconomic and institutional factors and the lack of diversification has clearly led to bank fragility and consequently to banking crises.

Suggested Citation

  • Rim Mekki, 2019. "The Impact of Banking Regulation on the Emergence of Crises in Emerging Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(8), pages 901-912.
  • Handle: RePEc:asi:aeafrj:v:9:y:2019:i:8:p:901-912:id:1847
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