The optimization of banking regulation intensity from the perspective of financial stability in banking sector: an empirical analysis

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)