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Banking risk and regulation: Does one size fit all?

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  • Klomp, Jeroen
  • Haan, Jakob de

Abstract

Using data for more than 200 banks from 21 OECD countries for the period 2002–2008, we examine the impact of bank regulation and supervision on banking risk using quantile regressions. In contrast to most previous research, we find that banking regulation and supervision has an effect on the risks of high-risk banks. However, most measures for bank regulation and supervision do not have a significant effect on low-risk banks. As banking risk and bank regulation and supervision are multi-faceted concepts, our measures for both concepts are constructed using factor analysis.

Suggested Citation

  • Klomp, Jeroen & Haan, Jakob de, 2012. "Banking risk and regulation: Does one size fit all?," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3197-3212.
  • Handle: RePEc:eee:jbfina:v:36:y:2012:i:12:p:3197-3212
    DOI: 10.1016/j.jbankfin.2011.10.006
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    Keywords

    Financial soundness; Bank regulation and supervision; Banking risk; Quantile regression;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G2 - Financial Economics - - Financial Institutions and Services

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