DOI: https://doi.org/10.36719/2663-4619/113/128-133
Kanan Valizadeh
Baku Business University
https://orcid.org/0009-0009-6855-2788
kenanvelizade84@gmail.com
Assessment of the Effectiveness of Regulatory Policies in Ensuring
Financial Stability in the Banking Sector
Abstract
This article conducts a comparative evaluation of the effectiveness of regulatory policies in ensuring financial stability in the banking sectors across various regions based on data from 2020 to 2024. There have been examined the impact of macroprudential tools, capital adequacy, and non-performing loan levels on banking stability. The findings demonstrate that stricter regulatory frameworks—particularly capital requirements and countercyclical buffers—have a statistically significant positive effect on financial stability indicators. In advanced economies, this effect is enhanced by strong institutional quality, whereas in emerging markets it largely depends on the effectiveness of prudential supervision. Additionally, macroeconomic conditions such as high inflation and weak economic growth may reduce the effectiveness of regulatory interventions. The study emphasizes that successful design and implementation of regulatory policy require alignment with the country-specific institutional and economic context.
Keywords: banking sector, financial stability, regulatory policy