Bank Regulations and Their Effects on Banks’ Profitability: A Literature Review

This paper reviews the relevant literature on the impact of regulation and supervision on the profitability of banks. The paper reviews and critically analyses the theoretical and empirical literature on the relationship between regulations and profitability and their effect on the banks‟ risk profile. Considering the outcomes, findings and recommendations from studies as articulated in the literature reviewed, it is comprehensible that the impact of regulation and supervision on banking activities varies and appears to be hybrid and c o n te x t specific to the period and sample under consideration. Such rules appear to evolve naturally according to economic and financial contexts and per country.