Title: Impact of capital regulation on financial stability: a North-European study

Authors: Ahanaf Shahriar; Muhammad Nazmul Hoque; Peter Wanke; Md. Abul Kalam Azad

Addresses: Department of Business and Technology Management, Islamic University of Technology, Gazipur, Bangladesh ' Accounting Research Institute, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia ' Business Analytics and Economics Research Unit, COPPEAD Graduate Business School, Brazil ' Department of Business and Technology Management, Islamic University of Technology, Gazipur, Bangladesh

Abstract: Capital regulations by the governments worldwide aim for strengthening financial stability. Yet, financial turmoil is continuing. Despite a substantial number of studies on financial stability worldwide, findings from Northern European countries are limited. This study examines the impact of capital regulation on financial stability of North European countries (Denmark, Finland, Iceland, Norway, Sweden and the UK). Over the sample period of 2010-2020, a panel data regression analysis is done on a substantially balanced panel data employing a collection of six diverse North European nation financial institutions. Regression analysis reveals that the capital ratio, leverage ratio, country governance index and ownership concentration have statistically significant impacts on stability. However, the effect of the bank size, bank profitability and macro-economic factor, i.e., annual GDP growth, offered statistically insignificant impact on stability of financial institutions.

Keywords: North Europe; financial institutions; stability; capital ratio; ownership concentration.

DOI: 10.1504/IJEA.2022.126294

International Journal of Economics and Accounting, 2022 Vol.11 No.3, pp.293 - 305

Received: 08 Nov 2021
Accepted: 03 Sep 2022
Published online: 18 Oct 2022 *

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