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The objective of this paper is to examine the impact of the new banking regulation on EU real economic activity in the period following the global financial crisis using a sample of 22 listed banking groups with high systemic importance, using dynamic panel models with a one- step GMM estimator. Higher regulatory capital and liquidity requirements are the main consequences of the global financial crisis, the pro-cyclical contraction of bank credit, and the advanced adaptive consolidation of the banking sector. The strengthened role of ECB as lender of last resort and market maker may have had a significant impact on eliminating interbank market dysfunctionality and maintaining overall financial stability. Although the full implementation of the structural regulation of Basel III on the one hand raises the question of the consistency of the universal banking model, especially in bank-oriented economies due to capital constraints. On the other hand, the long-term stability of reduced systemic risks and the stimulation of the credit cycle is at stake. The research results clearly show that the necessary increase in a banking firm's regulatory capital and liquidity position have positive effects on real economic activity and potential sustainable economic growth. |
