[STBI-17-12-2016] Regulatory restrictions and bank stability in Asian countries

by Dr. Linh Nguyen

11:00 am, Thursday, 17-12-2015
Hall H.001, UEH School of Economics

Abstract

This paper examines whether bank stability is related to regulatory restrictions on banks using a sample of 497 banks in 16 developed and developing Asian countries. The exploration of interest rate controls, credit controls and entry restrictions on bank stability adds to the bank regulation literature which tends to focus on activity restrictions, foreign bank entry restrictions or regulatory restrictions as a composite index. The empirical evidence found in this research suggests that each type of regulatory restriction affects bank stability differently depending on economic development. Interest rate and entry restrictions are positively associated with bank stability in developing countries but not developed ones, whereas credit controls are negatively related in both developed and developing countries. This result, therefore, provides more comprehensive evidence of regulatory restrictions and economic development in relation to bank stability.

JEL classification: G21, G28, G32, H11, L32, L11

Keywords: Regulatory Restrictions; Interest Rate controls; Entry barriers, Credit controls; Economic development; Bank Stability; Asian Countries.

Presenter

Dr. Linh Nguyen is a lecturer at School of Banking, University of Economics Ho Chi Minh City. Dr. Linh Nguyen’s research focuses on the relationship of government intervention such as regulation, ownership, and banking sector stability, especially in the context of systemic banking crisis. Dr. Linh Nguyen is also interested in studies of shadow banking, funding costs and systemic risk as well as bank liquidity and risk-return trade-off. Linh awarded her PhD in Banking and Finance from Monash University, Australia in 2014.