return of average assets

The Effects of Macroprudential Policy on Banks' Profitability

Despite the importance of profitability to banks’ growth and stability, there have, to our knowledge, been no studies which assess the effect of macroprudential regulation on banks’ profitability, a key aspect of the transmission of macroprudential measures. We seek to fill this lacuna with empirical estimates for a sample of 6,010 global banks. These suggest that over 2000-2013, a number of measures of macroprudential policy had a negative and significant effect on banks’ profitability as measured by return of average assets and return on average equity.