1 Introduction
2 Data, variables and descriptive statistics
2.1 Data and sample
2.2 Variables of bank regulation and supervision
2.3 Measure of systemic risk
2.4 Other control variables
2.5 Descriptive statistics
Country | N | Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total |
---|---|---|---|---|---|---|
Argentina | 71 | 0.418 | 0.531 | 0.511 | 0.707 | 0.564 |
Australia | 127 | 0.445 | 0.780 | 0.880 | 0.139 | 0.633 |
Austria | 108 | 0.468 | 0.441 | 0.674 | 0.0540 | 0.446 |
Bahrain | 75 | 0.613 | 0.489 | 0.849 | 0.0889 | 0.600 |
Bangladesh | 115 | 0.470 | 0.333 | 0.964 | 0.464 | 0.619 |
Belgium | 20 | 0.394 | 0.583 | 0.825 | 0.300 | 0.571 |
Botswana | 15 | 0.438 | 0.333 | 0.800 | 0 | 0.427 |
Brazil | 124 | 0.573 | 0.543 | 0.867 | 0 | 0.580 |
Bulgaria | 13 | 0.466 | 0.333 | 0.554 | 0.231 | 0.417 |
Canada | 129 | 0.532 | 0.793 | 0.407 | 0.616 | 0.642 |
Chile | 81 | 0.610 | 0.309 | 0.747 | 0.208 | 0.538 |
China | 13 | 0.692 | 0.0256 | 0.808 | 0 | 0.456 |
Colombia | 53 | 0.568 | 0.509 | 0.594 | 0.160 | 0.516 |
Croatia | 44 | 0.607 | 0 | 0.598 | 0.333 | 0.422 |
Cyprus | 25 | 0.532 | 0.333 | 0.920 | 0 | 0.514 |
Czech | 11 | 0.409 | 0.485 | 0.530 | 0.561 | 0.514 |
Denmark | 231 | 0.341 | 0.766 | 0.561 | 0.181 | 0.481 |
Ecuador | 16 | 0.500 | 0.667 | 0.600 | 0.167 | 0.536 |
Egypt | 99 | 0.383 | 0.316 | 0.899 | 0.167 | 0.472 |
Finland | 28 | 0.536 | 0.869 | 0.286 | 0.0536 | 0.479 |
France | 361 | 0.386 | 0.695 | 0.554 | 0.391 | 0.533 |
Germany | 248 | 0.150 | 0.536 | 0.502 | 0.490 | 0.378 |
Greece | 58 | 0.444 | 0.833 | 0.604 | 0.0144 | 0.523 |
Hong Kong SAR | 70 | 0.584 | 0.505 | 0.821 | 0.124 | 0.590 |
Hungary | 17 | 0.548 | 0.431 | 0.941 | 0.176 | 0.605 |
Iceland | 14 | 0.554 | 0.190 | 0.381 | 0.119 | 0.326 |
India | 380 | 0.434 | 0.344 | 0.781 | 0.0158 | 0.426 |
Indonesia | 150 | 0.714 | 0.333 | 0.988 | 0.341 | 0.713 |
Ireland | 13 | 0.462 | 0.333 | 0.769 | 0.167 | 0.471 |
Israel | 91 | 0.420 | 0.667 | 0.799 | 0.0440 | 0.534 |
Italy | 301 | 0.509 | 0.762 | 0.328 | 0.203 | 0.486 |
Japan | 875 | 0.484 | 0.623 | 0.939 | 0.0838 | 0.609 |
Jordan | 106 | 0.352 | 0.333 | 0.628 | 0 | 0.327 |
Kazakhstan | 8 | 0 | 0 | 0.800 | 0 | 0.113 |
Kenya | 33 | 0.625 | 0.859 | 0.885 | 0.621 | 0.872 |
Kuwait | 166 | 0.667 | 0.333 | 0.509 | 0 | 0.438 |
Lebanon | 33 | 0.616 | 0.333 | 0.770 | 0.212 | 0.558 |
Lithuania | 13 | 0.688 | 0.667 | 0.723 | 0.590 | 0.778 |
Luxembourg | 23 | 0.283 | 0.667 | 0.804 | 0.0362 | 0.467 |
Malaysia | 139 | 0.249 | 0.667 | 0.622 | 0.157 | 0.420 |
Malta | 20 | 0.406 | 0.833 | 0.900 | 0.0833 | 0.624 |
Mexico | 74 | 0.429 | 0.802 | 0.786 | 0.273 | 0.635 |
Morocco | 68 | 0.413 | 0.647 | 0.831 | 0.0662 | 0.541 |
Niger | 6 | 0.542 | 0.389 | 0.611 | 0 | 0.430 |
Nigeria | 20 | 0.625 | 0.333 | 0.800 | 0.333 | 0.604 |
Norway | 201 | 0.428 | 0.333 | 0.477 | 0.558 | 0.457 |
Oman | 23 | 0.435 | 0.667 | 0.696 | 0.0580 | 0.509 |
Pakistan | 173 | 0.413 | 0.541 | 0.910 | 0 | 0.518 |
Panama | 2 | 0.563 | 0.333 | 1 | 0 | 0.556 |
Peru | 68 | 0.479 | 0.711 | 0.708 | 0.206 | 0.587 |
Poland | 159 | 0.307 | 0.667 | 0.642 | 0 | 0.414 |
Portugal | 47 | 0.431 | 0.695 | 0.706 | 0.0426 | 0.516 |
Qatar | 34 | 0.463 | 0.333 | 0.765 | 0 | 0.427 |
Russian | 8 | 0.656 | 0.667 | 0.550 | 0.167 | 0.594 |
Singapore | 38 | 0.257 | 0.675 | 0.654 | 0.0746 | 0.416 |
Slovakia | 33 | 0.419 | 0.798 | 1 | 0.232 | 0.692 |
South Africa | 23 | 0.688 | 0.667 | 0.400 | 0 | 0.515 |
Spain | 94 | 0.328 | 0.397 | 0.555 | 0.291 | 0.386 |
Sri Lanka | 109 | 0.636 | 0.538 | 0.583 | 0 | 0.513 |
Sweden | 41 | 0.329 | 0.561 | 0.167 | 0.0610 | 0.245 |
Switzerland | 235 | 0.609 | 0.694 | 0.792 | 0.294 | 0.695 |
Thailand | 163 | 0.248 | 0.444 | 0.803 | 0.0542 | 0.386 |
Tunisia | 56 | 0.375 | 0 | 0.600 | 0 | 0.225 |
Venezuela | 109 | 0.398 | 0.502 | 0.811 | 0.0734 | 0.483 |
Zimbabwe | 4 | 0.625 | 0.667 | 0.800 | 0.167 | 0.665 |
Total | 6305 | 0.450 | 0.554 | 0.708 | 0.183 | 0.518 |
Variable | N | Mean | Standard deviation | 25th | Medium | 75th |
---|---|---|---|---|---|---|
Panel A: summary statistics | ||||||
MES | 6305 | 0.992 | 1.140 | 0.0959 | 0.751 | 1.640 |
Activity restriction | 6305 | 0.450 | 0.222 | 0.313 | 0.438 | 0.563 |
Initial capital stringency | 6305 | 0.554 | 0.241 | 0.333 | 0.667 | 0.667 |
Prompt corrective action | 6305 | 0.708 | 0.263 | 0.500 | 0.800 | 1 |
Deposit insurer power | 6305 | 0.183 | 0.244 | 0 | 0 | 0.333 |
Regulation total | 6305 | 0.518 | 0.178 | 0.395 | 0.526 | 0.673 |
MTBV | 6305 | 1.398 | 0.980 | 0.760 | 1.160 | 1.750 |
LgTA | 6305 | 9.322 | 2.389 | 7.632 | 9.153 | 10.96 |
LLP | 6305 | 0.233 | 2.973 | 0.0488 | 0.140 | 0.271 |
ROAA | 6305 | 1.005 | 4.516 | 0.320 | 0.830 | 1.600 |
GDP growth | 6305 | 2.970 | 3.702 | 1.136 | 2.587 | 5.278 |
Inflation | 6305 | 4.263 | 6.348 | 0.795 | 2.555 | 6.387 |
Economic freedom | 6305 | 65.35 | 8.882 | 59.20 | 64.90 | 70.90 |
Variables | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Panel B: correlation matrix | ||||||||||||||
(1) | MES | 1 | ||||||||||||
(2) | Activity restriction | 0 | 1 | |||||||||||
(3) | Initial capital stringency | 0.027** | 0.01 | 1 | ||||||||||
(4) | Prompt corrective action | 0.139*** | 0.189*** | 0.034*** | 1 | |||||||||
(5) | Deposit insuer power | − 0.072*** | − 0.047*** | 0.077*** | − 0.162*** | 1 | ||||||||
(6) | Regulation total | 0.056*** | 0.683*** | 0.474*** | 0.576*** | 0.278*** | 1 | |||||||
(7) | MTBV | 0.094*** | − 0.042*** | − 0.061*** | − 0.058*** | 0.014 | − 0.076*** | 1 | ||||||
(8) | lgTA | 0.167*** | 0.058*** | − 0.062*** | 0.025** | 0.085*** | 0.052*** | 0.090*** | 1 | |||||
(9) | LLP | − 0.024* | − 0.004 | − 0.016 | 0.001 | − 0.020* | − 0.016 | − 0.012 | 0.025** | 1 | ||||
(10) | ROA | − 0.073*** | − 0.028** | − 0.012 | − 0.016 | 0.013 | − 0.026** | 0.019 | − 0.016 | − 0.303*** | 1 | |||
(11) | GDP Growth | − 0.048*** | − 0.075*** | − 0.216*** | 0.070*** | − 0.068*** | − 0.125*** | 0.149*** | 0.125*** | − 0.01 | 0.109*** | 1 | ||
(12) | Inflation | − 0.116*** | 0.018 | − 0.252*** | − 0.036*** | − 0.02 | − 0.121*** | 0.093*** | 0.116*** | 0.009 | 0.119*** | 0.216*** | 1 | |
(13) | Economic Freedom | 0.029** | 0.033*** | 0.248*** | − 0.038*** | 0.081*** | 0.135*** | − 0.006 | − 0.155*** | − 0.006 | − 0.068*** | − 0.269*** | − 0.468*** | 1 |
3 Empirical results
3.1 Baseline results
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | |
Regulation | 0.204** | 0.361*** | 0.200*** | − 0.093 | 0.419*** |
(0.091) | (0.081) | (0.077) | (0.062) | (0.105) | |
MTBV | 0.072*** | 0.073*** | 0.076*** | 0.071*** | 0.076*** |
(0.024) | (0.024) | (0.024) | (0.024) | (0.024) | |
lgTA | − 0.110** | − 0.113** | − 0.108** | − 0.128*** | − 0.090** |
(0.045) | (0.044) | (0.044) | (0.044) | (0.044) | |
LLP | − 0.010* | − 0.010* | − 0.010* | − 0.010* | − 0.010* |
(0.005) | (0.005) | (0.005) | (0.005) | (0.005) | |
ROAA | − 0.002 | − 0.002 | − 0.003 | − 0.003 | − 0.002 |
(0.005) | (0.005) | (0.005) | (0.005) | (0.005) | |
GDP growth | 0.006* | 0.004 | 0.006* | 0.005 | 0.006* |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | |
Inflation | − 0.001 | − 0.001 | − 0.001 | − 0.002 | − 0.000 |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | |
Economic freedom | 0.006 | 0.004 | 0.005 | 0.004 | 0.006 |
(0.005) | (0.005) | (0.005) | (0.005) | (0.005) | |
_cons | 1.335** | 1.323** | 1.292** | 1.629*** | 1.051* |
(0.598) | (0.590) | (0.595) | (0.589) | (0.595) | |
Bank-fixed effect | Yes | Yes | Yes | Yes | Yes |
Time-fixed effect | Yes | Yes | Yes | Yes | Yes |
N | 6305 | 6305 | 6305 | 6305 | 6305 |
Adj. R-sq | 0.267 | 0.270 | 0.268 | 0.267 | 0.269 |
3.2 Endogeneity tests
3.2.1 Basel II implementation and systemic risk
Dependent variable | (1) | (2) |
---|---|---|
MES | MES | |
Basel II Dummy | 0.175** | |
(0.085) | ||
Basel II t − 4 | − 0.275 | |
(0.213) | ||
Basel II t − 3 | − 0.063 | |
(0.177) | ||
Basel II t − 2 | − 0.074 | |
(0.127) | ||
Basel II t − 1 | − 0.084 | |
(0.090) | ||
Basel II t + 1 | 0.281*** | |
(0.094) | ||
Basel II t + 2 | 0.269** | |
(0.131) | ||
Basel II t + 3 | 0.478*** | |
(0.170) | ||
Basel II t + 4 | 0.484** | |
(0.215) | ||
Basel II t + 5 | 0.781*** | |
(0.265) | ||
Basel II t + 6 | 0.999*** | |
(0.314) | ||
_cons | 1.204* | 1.061 |
(0.715) | (0.787) | |
Control variables | Yes | Yes |
Bank fixed effect | Yes | Yes |
Year fixed effect | Yes | Yes |
N | 4880 | 4880 |
Adj. R-sq | 0.285 | 0.287 |
3.2.2 Instrumental variable analysis
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | |
Panel A: first stage | |||||
Latitude | 0.496*** | − 0.641*** | − 0.336*** | − 1.195*** | − 0.387*** |
(0.111) | (0.248) | (0.108) | (0.087) | (0.077) | |
Control variables | Yes | Yes | Yes | Yes | Yes |
First stage F-test (p value) | 0.000*** | 0.000*** | 0.000*** | 0.000*** | 0.000*** |
Panel B: second stage | |||||
Regulation | 0.412* | 1.354* | 1.061* | 1.793* | 0.536* |
(0.224) | (0.735) | (0.576) | (0.973) | (0.291) | |
MTBV | 0.072*** | 0.072*** | 0.086*** | 0.078*** | 0.075*** |
(0.024) | (0.024) | (0.026) | (0.025) | (0.024) | |
lgTA | − 0.125*** | − 0.122*** | − 0.123*** | − 0.129*** | − 0.125*** |
(0.044) | (0.043) | (0.043) | (0.045) | (0.044) | |
LLP | − 0.009* | − 0.010* | − 0.009* | − 0.011* | − 0.009* |
(0.006) | (0.005) | (0.006) | (0.006) | (0.006) | |
ROAA | − 0.002 | − 0.002 | − 0.002 | − 0.004 | − 0.002 |
(0.005) | (0.005) | (0.005) | (0.005) | (0.005) | |
GDP Growth | 0.007* | 0.005 | 0.009** | 0.002 | 0.006* |
(0.004) | (0.004) | (0.004) | (0.004) | (0.003) | |
Inflation | − 0.001 | 0.004 | 0.003 | − 0.002 | 0.000 |
(0.003) | (0.004) | (0.004) | (0.003) | (0.003) | |
Economic freedom | 0.005 | 0.009* | 0.003 | 0.007 | 0.005 |
(0.005) | (0.005) | (0.006) | (0.005) | (0.005) | |
_cons | 1.432*** | 0.611 | 0.934** | 1.322*** | 1.322*** |
(0.538) | (0.506) | (0.471) | (0.512) | (0.512) | |
Bank-fixed effect | Yes | Yes | Yes | Yes | Yes |
Time-fixed effect | Yes | Yes | Yes | Yes | Yes |
N | 6305 | 6305 | 6305 | 6305 | 6305 |
Adj. R-sq | 0.266 | 0.266 | 0.266 | 0.266 | 0.266 |
3.3 Robustness test
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Depositor | Regulation total | |
Regulation | 0.410*** | 0.551*** | 0.433*** | − 0.084 | 0.766*** |
(0.111) | (0.100) | (0.096) | (0.080) | (0.129) | |
MTBV | 0.042 | 0.047 | 0.050 | 0.044 | 0.049 |
(0.033) | (0.033) | (0.033) | (0.033) | (0.033) | |
lgTA | − 0.154** | − 0.149** | − 0.133** | − 0.188*** | − 0.103* |
(0.060) | (0.058) | (0.060) | (0.059) | (0.060) | |
LLP | − 0.010 | − 0.011* | − 0.010 | − 0.011 | − 0.010 |
(0.007) | (0.007) | (0.007) | (0.007) | (0.007) | |
ROAA | 0.003 | 0.003 | 0.002 | 0.003 | 0.002 |
(0.006) | (0.006) | (0.006) | (0.006) | (0.006) | |
GDP growth | 0.003 | 0.000 | 0.004 | 0.001 | 0.004 |
(0.004) | (0.004) | (0.004) | (0.004) | (0.004) | |
Inflation | − 0.004 | − 0.003 | − 0.003 | − 0.005 | − 0.002 |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | |
Economic freedom | 0.006 | 0.008 | 0.005 | 0.004 | 0.008 |
(0.007) | (0.006) | (0.006) | (0.006) | (0.006) | |
_cons | 1.875** | 1.586** | 1.559** | 2.405*** | 1.144 |
(0.749) | (0.714) | (0.732) | (0.726) | (0.741) | |
Bank-fixed effect | Yes | Yes | Yes | Yes | Yes |
Time-fixed effect | Yes | Yes | Yes | Yes | Yes |
N | 6305 | 6305 | 6305 | 6305 | 6305 |
Adj. R-sq | 0.352 | 0.355 | 0.353 | 0.349 | 0.356 |
Without countries less than 10 observations per year | Without Japan | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | |
Regulation | 0.288** | 0.652*** | 0.328*** | − 0.074 | 0.706*** | 0.249*** | 0.317*** | 0.241*** | − 0.088 | 0.445*** |
(0.114) | (0.112) | (0.095) | (0.071) | (0.134) | (0.090) | (0.083) | (0.079) | (0.061) | (0.105) | |
MTBV | 0.047 | 0.052* | 0.058* | 0.047 | 0.057* | 0.092*** | 0.092*** | 0.096*** | 0.090*** | 0.096*** |
(0.029) | (0.029) | (0.030) | (0.029) | (0.029) | (0.026) | (0.026) | (0.026) | (0.026) | (0.026) | |
lgTA | − 0.188*** | − 0.195*** | − 0.168*** | − 0.215*** | − 0.140** | − 0.066 | − 0.084* | − 0.067 | − 0.092** | − 0.050 |
(0.064) | (0.061) | (0.065) | (0.063) | (0.063) | (0.046) | (0.046) | (0.046) | (0.046) | (0.046) | |
LLP | − 0.009 | − 0.010 | − 0.009 | − 0.009 | − 0.009 | − 0.009* | − 0.009* | − 0.009 | − 0.009 | − 0.009 |
(0.007) | (0.007) | (0.007) | (0.007) | (0.007) | (0.006) | (0.006) | (0.006) | (0.006) | (0.006) | |
ROAA | − 0.005 | − 0.005 | − 0.006 | − 0.006 | − 0.006 | − 0.006 | − 0.006 | − 0.006 | − 0.007 | − 0.006 |
(0.006) | (0.007) | (0.006) | (0.007) | (0.006) | (0.006) | (0.006) | (0.006) | (0.006) | (0.006) | |
GDP growth | 0.010 | 0.007 | 0.013* | 0.009 | 0.013 | 0.008** | 0.006* | 0.008** | 0.007** | 0.008** |
(0.008) | (0.008) | (0.008) | (0.008) | (0.008) | (0.004) | (0.003) | (0.004) | (0.004) | (0.004) | |
Inflation | − 0.004 | − 0.005 | − 0.003 | − 0.005 | − 0.003 | 0.001 | 0.001 | 0.001 | 0.000 | 0.002 |
(0.004) | (0.004) | (0.004) | (0.004) | (0.004) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | |
Economic freedom | 0.025*** | 0.023*** | 0.022** | 0.022** | 0.026*** | 0.006 | 0.003 | 0.005 | 0.004 | 0.006 |
(0.009) | (0.009) | (0.009) | (0.009) | (0.009) | (0.006) | (0.006) | (0.006) | (0.006) | (0.006) | |
_cons | 0.906 | 0.826 | 0.744 | 1.396* | 0.211 | 0.892 | 1.111* | 0.811 | 1.289** | 0.624 |
(0.768) | (0.734) | (0.751) | (0.750) | (0.750) | (0.648) | (0.634) | (0.649) | (0.637) | (0.646) | |
Time fixed effect | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Bank fixed effect | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
N | 4391 | 4391 | 4391 | 4391 | 4391 | 5430 | 5430 | 5430 | 5430 | 5430 |
Adj. R-sq | 0.278 | 0.285 | 0.279 | 0.276 | 0.283 | 0.234 | 0.235 | 0.234 | 0.232 | 0.236 |
(1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | |
---|---|---|---|---|---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | |
Regulation | 0.193** | 0.377*** | 0.189** | − 0.092 | 0.410*** | 0.267*** | 0.352*** | 0.195** | − 0.095 | 0.454*** |
(0.090) | (0.080) | (0.077) | (0.062) | (0.105) | (0.091) | (0.079) | (0.076) | (0.062) | (0.104) | |
MTBV | 0.071*** | 0.072*** | 0.075*** | 0.070*** | 0.075*** | 0.063*** | 0.065*** | 0.067*** | 0.063*** | 0.068*** |
(0.024) | (0.024) | (0.024) | (0.024) | (0.024) | (0.024) | (0.024) | (0.024) | (0.024) | (0.024) | |
lgTA | − 0.113*** | − 0.111*** | − 0.111*** | − 0.129*** | − 0.094** | − 0.083* | − 0.091** | − 0.088** | − 0.106** | − 0.066 |
(0.042) | (0.042) | (0.042) | (0.042) | (0.042) | (0.043) | (0.043) | (0.042) | (0.042) | (0.043) | |
LLP | − 0.010* | − 0.010* | − 0.010* | − 0.010* | − 0.010* | − 0.009* | − 0.010* | − 0.009 | − 0.010* | − 0.009* |
(0.005) | (0.005) | (0.006) | (0.006) | (0.005) | (0.006) | (0.006) | (0.006) | (0.006) | (0.006) | |
ROAA | − 0.003 | − 0.003 | − 0.003 | − 0.003 | − 0.003 | − 0.004 | − 0.003 | − 0.004 | − 0.004 | − 0.003 |
(0.005) | (0.005) | (0.005) | (0.005) | (0.005) | (0.005) | (0.005) | (0.005) | (0.005) | (0.005) | |
GDP growth | 0.005 | 0.003 | 0.005 | 0.004 | 0.005 | 0.004 | 0.003 | 0.004 | 0.003 | 0.004 |
(0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | |
Inflation | − 0.001 | − 0.000 | − 0.001 | − 0.001 | − 0.000 | 0.000 | 0.001 | 0.001 | − 0.000 | 0.001 |
(0.003) | (0.002) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | (0.003) | |
Control of corruption | 0.248** | 0.286*** | 0.234** | 0.250** | 0.249** | |||||
(0.104) | (0.105) | (0.105) | (0.105) | (0.104) | ||||||
Overall governance index | 0.826*** | 0.747*** | 0.756*** | 0.761*** | 0.805*** | |||||
(0.158) | (0.153) | (0.156) | (0.154) | (0.156) | ||||||
_cons | 1.538*** | 1.348*** | 1.435*** | 1.719*** | 1.261*** | 0.891** | 0.903** | 0.898** | 1.203*** | 0.651 |
(0.389) | (0.382) | (0.393) | (0.385) | (0.390) | (0.407) | (0.400) | (0.407) | (0.399) | (0.408) | |
Time fixed effect | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Bank fixed effect | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
N | 6305 | 6305 | 6305 | 6305 | 6305 | 6305 | 6305 | 6305 | 6305 | 6305 |
Adj. R-sq | 0.268 | 0.271 | 0.268 | 0.268 | 0.270 | 0.273 | 0.275 | 0.273 | 0.272 | 0.275 |
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | |
Regulation | 0.581*** | 0.279*** | 0.212* | − 0.239* | 0.561*** |
(0.205) | (0.098) | (0.114) | (0.130) | (0.196) | |
MTBV | − 0.044 | − 0.047 | − 0.045 | − 0.051 | − 0.040 |
(0.040) | (0.041) | (0.041) | (0.042) | (0.040) | |
lgTA | − 0.152 | − 0.213 | − 0.193 | − 0.222 | − 0.159 |
(0.149) | (0.150) | (0.154) | (0.151) | (0.154) | |
LLP | − 0.037 | − 0.036 | − 0.035 | − 0.036 | − 0.036 |
(0.028) | (0.028) | (0.028) | (0.028) | (0.029) | |
ROAA | − 0.025*** | − 0.025*** | − 0.025*** | − 0.025*** | − 0.025*** |
(0.009) | (0.009) | (0.009) | (0.009) | (0.009) | |
GDP growth | − 0.007 | − 0.010* | − 0.008 | − 0.009 | − 0.008 |
(0.005) | (0.006) | (0.005) | (0.006) | (0.005) | |
Inflation | 0.012* | 0.011* | 0.012* | 0.011 | 0.013* |
(0.007) | (0.007) | (0.007) | (0.007) | (0.007) | |
Economic freedom | − 0.026*** | − 0.033*** | − 0.032*** | − 0.033*** | − 0.029*** |
(0.010) | (0.010) | (0.010) | (0.010) | (0.010) | |
_cons | 2.600 | 3.618* | 3.388* | 3.903** | 2.788 |
(1.847) | (1.887) | (1.949) | (1.913) | (1.940) | |
Bank-fixed effect | Yes | Yes | Yes | Yes | Yes |
Time-fixed effect | Yes | Yes | Yes | Yes | Yes |
N | 5510 | 5510 | 5510 | 5510 | 5510 |
Adj. R-sq | 0.002 | 0.002 | 0.002 | 0.002 | 0.002 |
3.4 Heterogeneity effects
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
Activity restriction | Initial capital stringency | Prompt corrective action | Deposit insurer power | Regulation total | |
Panel A | |||||
Regulation | 0.292*** | 0.564*** | 0.424*** | − 0.045 | 0.705*** |
(0.110) | (0.119) | (0.110) | (0.087) | (0.133) | |
Regulation × equity/assets | − 0.008 | − 0.018** | − 0.019*** | − 0.004 | − 0.024*** |
(0.007) | (0.008) | (0.007) | (0.006) | (0.007) | |
Equity/assets | 0.005 | 0.010* | 0.014** | 0.001 | 0.013*** |
(0.005) | (0.006) | (0.006) | (0.004) | (0.005) | |
_cons | 1.226* | 1.129* | 1.102* | 1.594** | 0.850 |
(0.671) | (0.660) | (0.661) | (0.657) | (0.668) | |
Other control variables | Yes | Yes | Yes | Yes | Yes |
Time fixed effect | Yes | Yes | Yes | Yes | Yes |
Bank fixed effect | Yes | Yes | Yes | Yes | Yes |
N | 6305 | 6305 | 6305 | 6305 | 6305 |
Adj. R-sq | 0.268 | 0.271 | 0.270 | 0.267 | 0.271 |
Panel B | |||||
Regulation | 0.206** | 0.356*** | 0.273*** | − 0.108* | 0.529*** |
(0.100) | (0.108) | (0.079) | (0.064) | (0.123) | |
Regulation * diversification | − 0.014 | 0.017 | − 0.180*** | 0.045 | − 0.273* |
(0.107) | (0.204) | (0.047) | (0.053) | (0.163) | |
Diversification | 0.021 | 0.012 | 0.192*** | − 0.003 | 0.160* |
(0.030) | (0.069) | (0.047) | (0.023) | (0.087) | |
_cons | 1.371** | 1.358** | 1.239** | 1.672*** | 1.018* |
(0.598) | (0.588) | (0.590) | (0.588) | (0.596) | |
Other control variables | Yes | Yes | Yes | Yes | Yes |
Time fixed effect | Yes | Yes | Yes | Yes | Yes |
Bank fixed effect | Yes | Yes | Yes | Yes | Yes |
N | 6305 | 6305 | 6305 | 6305 | 6305 |
Adj. R-sq | 0.267 | 0.270 | 0.269 | 0.266 | 0.270 |