Abstract<\/u><\/p>\n
We investigate whether and how strongly Basel 3 chief innovations jointly affected in different ways individual Eurozone banks\u2019 stability (z-score) across six business models (BMs). We study this issue in the initial years when adaptation was most intense (2011\u20132014) and the Eurozone underwent a phase with sovereign crises abated by ECB policies easing financial conditions. In parallel, we run this exercise over 2000\u20132010 data, a time frame over which Basel 3 did not apply yet to see through the eyes of the regulator. Irrespective of BMs, we identify the leverage ratio as the most effective driver of banks\u2019 stability. However, the impact on z-score of Basel 3 chief drivers does not seem to differ significantly on 2011\u20132014 vs. 2000\u20132010. Next, interactions with banks\u2019 BMs suggest that Basel 3 innovations improve z-scores the most at traditionally focused banks (cooperative and savings banks), vis-\u00e0-vis diversified banks. Our results suggest Basel regulatory decisions were questionable. First, the front loading of the increased minimum capital requirements vs. the backloading of the leverage ratio phasing in may have lured banks from credit to financial assets. Second, our findings support the desirability of revising the current \u201cone-size-fits-all\u201d European prudential framework, which disregards BMs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Cite: G. Birindelli, P. Ferretti, G. Ferri, M. Savioli (2022), Regulatory Reform and Banking Diversity: Reassessing Basel 3, Annals of Finance, pages 1-28, https:\/\/doi.org\/10.1007\/s10436-021-00406-3<\/p>\n","protected":false},"author":5,"featured_media":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","format":"standard","meta":{"footnotes":""},"portfolio_category":[99],"portfolio_skills":[],"portfolio_tags":[],"yoast_head":"\n