Abstract

This paper investigates a multifactorial model, which allows defining an optimum level of banking regulation intensity based on the provision of a financial stability (at the macrolevel) and financial stability of banks (at the microlevel). An aggregated index of banking regulation intensity as well as an integrated index of financial stability of banks, which were the main factorial and resultative characteristic features during investigations, was formed for carrying-out of an empirical analysis. The optimum level of intensity of banking regulation has been suggested to define as the extremum of function of integrated index of financial stability of banks (determined by the method of the uniform optimality) on the relevant influencing factors (method of principal components).

Keywords: financial sustainability, financial stability, banking regulation, optimization control.

JEL Classification: E50, F30, G21.

Cite as: Didenko, O., Dordevic, S. (2017). The optimization of banking regulation intensity from the perspective of financial stability in banking sector: an empirical analysis. Financial Markets, Institutions and Risks, 1(1), 43-53. http://doi.org/10.21272/fmir.1(1).43-53.2017.

References

1. Ajvazian, S.A., and Mkhiratian, V.S. (1998). Prikladnaya statistica i osnovy econometriki [Applied Statistics and Fundamentals of Econometrics], Moscow: UNITI, 1022 p.
2. Arbusov, S.G., Kolobov, Yu.V., Mishchenko, V.I., and Naumenkova S.V. (2011). Bankivska entsyklopedija [Bank encyclopedia]. Research Center of National Bank of Ukraine: Knowledge, 504 p.
3. Barth, James R., Luis G. Dopico, Daniel E. Nolle, and James A. Wilcox (2001). Bank Safety and Soundness and the Structure of Bank Supervision: A Cross-Country Analysis, 2001 Annual Meeting Toronto, Canada, October 18, 55 p.
4. Belova, I.V., Bashlaj, S.V. (2013). Vyznachennia finansovoji stabilnosti Ukrajiny [The definition of financial stability Ukraine], Visnyk Natsionalnogo banku Ukrajiny [Bulletin of the National Bank of Ukraine], 7, 25-31.
5. Central bank of Belarus [Online]. Retrieved from http://www.nbrb.by/.
6. Central Bank of Brazil [Online]. Retrieved from http://www.bcb.gov.br/pt-br/paginas/default.aspx.
7. Central Bank of Canada [Online]. Retrieved from http://www.bank-banque-canada.ca/index.html.
8. Central Bank of Chili [Online]. Retrieved from http://www.bcentral.cl/index.asp.
9. Central Bank of Estonia [Online]. Retrieved from http://www.eestipank.ee/.
10. Central Bank of Georgia [Online]. Retrieved from https://www.nbg.gov.ge/index.php?m=2.
11. Central Bank of Germany [Online]. Retrieved from http://www.bundesbank.de/Navigation/ DE/Home/home_node.html.
12. Central Bank of India [Online]. Retrieved from http://www.rbi.org.in/scripts/ BS_ViewBulletin.aspx?Id=10964.
13. Central Bank of Kazakhstan [Online]. Retrieved from http://www.nationalbank.kz/?&switch=kazakh.
14. Central Bank of Malaysia [Online]. Retrieved from http://www.bnm.gov.my/.
15. Central Bank of Nigeria [Online]. Retrieved from http://www.cenbank.org/.
16. Central Bank of Philippines [Online]. Retrieved from http://www.bsp.gov.ph/.
17. Central Bank of Poland [Online]. Retrieved from http://www.nbp.pl/.
18. Central Bank of Russia [Online]. Retrieved from http://www.cbr.ru/
19. Central Bank of the Netherlands [Online]. Retrieved from http://www.dnb.nl/index.htm.
20. Central Bank of United Kingdom [Online]. Retrieved from http://www.bankofengland.co.uk/ Pages/home.aspx.
21. Central Bank of United States of America [Online]. Retrieved from http://www.federalreserve.gov/.
22. Goodhart, C. (2015). Linkages between macro-prudential and micro-prudential supervision Butterworths, Journal of International Banking and Financial Law, 30(10), 607-609.
23. Kovalenko, V., Garkusha, Yu. (2013). Teoretychni ta metodychni pidhody do otsiniuvannia finansovoji stabilnosti bankivskoji systemy [Theoretical and methodological approaches to the assessment of financial stability of the banking system], Visnyk Natsionalnogo banku Ukrajiny [Bulletin of the National Bank of Ukraine], 7, pp. 35-40.
24. Shahchera, M., Jouzdani, N. (2011). The impact of regulation on soundness banking, 2010 International Conference of Business and Economics Research, Vol. 1 (2011), IACSIT Press, Kuala Lumpur, Malaysia. Retrieved from: http://www.ipedr.com/vol1/33-B10014.pdf.
25. Tanda, A. (2015). The Effects of Bank Regulation on the Relationship between Capital and Risk, Comparative Economic Studies, 57(1), pp. 31-54.
26. The National Bank of Ukraine [Online]. Retrieved from http://www.bank.gov.ua.
27. The World Bank [Online]. Retrieved from http://www.worldbank.org/.