The Effects of Banking Regulation on Asset Quality: A Panel Analysis

Nader Alber


This paper attempts to investigate the effects of banking regulation on asset quality. This has been conducted using a sample of 14 countries from 1) Middle East & Africa, 2) Europe & Central Asia, 3) Latin America & Caribbean and 4) East Asia & Pacific, over the period from 2006 to 2012.

Asset quality is measured by “bank nonperforming loans to gross loans” according to The World Bank database regarding World Development Indicators, while banking regulation is measured by the “response to Basel implementation” according to FSI survey of July 2013.

Results indicate that implementation of SA “Standardized Approach” and Conserv “Capital conservation buffer” may affect “asset quality” for low-asset quality countries (Middle East & Africa and Europe & Central Asia groups), while implementation of BIA “Basic indicator approach “ and P2 “Pillar2” may affect “asset quality” for high-asset quality ones (Latin America & Caribbean and East Asia & Pacific groups).

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International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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