Before the 2008 crisis, financial deregulation and market efficiency were considered to be the regulatory pillars, particularly within the Basel II framework. The 2008 crisis resulted in the adoption of a new regulatory philosophy: that of strengthening and tightening regulatory supervision (Beck, 2010). Basel III focused on strengthening prudential regulations, mostly by requiring more, and better, capital and better loss-absorption capacities by large banks (BIS, 2010). EU and US authorities have supplemented Basel III by instituting complex supervisory infrastructures, based on a number of newly created institutions together with a redefinition of the objectives and prerogatives of those already in existence. In many cases, these new regulatory structures are diamond-shaped, rather than ladder-shaped (Masciandaro, Nieto and Quintyn, 2011). The complexity of banking regulations, plus overlapping prerogatives on newly created institutions, have considerably increased regulatory costs and are thus a burden on banks (KPMG, 2013). Moreover, in the EU, the new institutional safety net has not been implemented consistently and has been more of a case of constant rearrangement according to changes in macroeconomic priorities: from financial stability (European Banking Authority-based framework) to financial growth (European Central Bank-based framework), which has led to increased organizational uncertainty and chaos.
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