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Banking risk and regulation: Does one size fit all?

  • Jeroen Klomp
  • Jakob de Haan

Using data for more than 200 banks from 21 OECD countries for the period 2002 to 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 multifaceted concepts, our measures for both concepts are constructed using factor analysis.

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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 323.

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Date of creation: Nov 2011
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Handle: RePEc:dnb:dnbwpp:323
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