Abstract
Purpose: The purpose of this paper is to investigate whether bank capital strength and external auditing requirements influenced international stock market stability during the 2007/2008 global financial crisis. Design/methodology/approach: Bank mandatory regulation data are obtained from the World Bank database, while stock market stability is gauged for 385 listed banks across 43 countries by means of generalised least squares regression models. Findings: The authors find that mandatory capital strength requirements and the existence of mandatory audit increase stock market stability across countries. Further, more profitable banks increase stock market stability. The results are robust to both country institutional settings and economic freedom characteristics. Originality/value: This paper provides evidence of the impact of bank regulations on stock market stability during the global financial crisis, thereby providing a useful insight for stakeholders to enhance financial regulation and policy.
| Original language | English |
|---|---|
| Pages (from-to) | 402-419 |
| Number of pages | 18 |
| Journal | Journal of Financial Regulation and Compliance |
| Volume | 24 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 1 Jan 2016 |
| Externally published | Yes |
Bibliographical note
Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.Keywords
- Bank regulation
- Capital strength
- Financial crisis
- Mandatory audit
- Market stability
ASJC Scopus subject areas
- Strategy and Management