Title: Progress or missed opportunity: regulation and bank stability in South European countries

Authors: Saima Mehzabin; Md. Yousuf; Peter Wanke; Md. Abul Kalam Azad

Addresses: Department of Business and Technology Management, Islamic University of Technology, Gazipur 1704, Bangladesh ' Chief Economist's Unit, Bangladesh Bank, Head Office, Dhaka 1000, Bangladesh; Graduate School of International Cooperation and Studies, Kobe University, 1-1, Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan ' Business Analytics and Economics Research Unit – COPPEAD, Graduate Business School, Rua Paschoal Lemme, 355. 21949-900, Brazil ' Department of Business and Technology Management, Islamic University of Technology, Gazipur 1704, Bangladesh

Abstract: Bank regulation as well as a country's macroeconomic regulations have been hindering bank profitability by ensuring higher bank capital and minimum holding of risks for achieving bank stability. The objective of this study is to determine the influence of internal and external factors on the stability of the banking sector in five South European countries i.e., Croatia, Italy, Portugal, Slovenia, Spain. This paper utilises panel data estimations using the bank sector of five South European countries during the time period of 2010 to 2020. The paper is guided by the hypothesis that adequate capital ratio, strong country governance and increased bank size have significant impact on the stability of banking sector. The findings of the regression analysis reveals that the profitability and ownership concentration do not have a significant impact on bank stability. Additionally, macro-economic variable GDP is also found to have no significant impact on stability.

Keywords: bank stability; capital ratio; bank size; South Europe; bank regulation; macroeconomic variables; bank capital; profitability; bank; GDP; bank size.

DOI: 10.1504/EMJM.2022.122005

EuroMed Journal of Management, 2022 Vol.4 No.2, pp.134 - 147

Received: 07 Nov 2021
Accepted: 25 Nov 2021
Published online: 07 Apr 2022 *

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