Regulatory Impact on Stock Prices: Capital Adequacy Requirements, Liquidity Ratios, and Other Regulatory Measures.

EasyChair Preprint 12442

Abstract

This study examines the intricate relationship between regulatory measures and stock prices, focusing on capital adequacy requirements, liquidity ratios, and other regulatory measures. Financial markets rely on regulatory frameworks to maintain stability, protect investors, and ensure the integrity of the financial system. Capital adequacy requirements mandate the minimum capital reserves banks must hold, while liquidity ratios assess a bank's ability to meet short-term obligations. Additionally, stress testing and leverage ratios further contribute to risk management and financial stability.

The impact of these regulatory measures on stock prices is multifaceted. Higher capital and liquidity requirements may enhance investor confidence and market stability but can also constrain profitability and hinder growth opportunities for financial institutions. Moreover, stress testing and leverage ratios affect market perceptions of risk and innovation within the sector.

Balancing financial stability with market growth presents a challenge for regulators. Overly stringent regulations may stifle economic activity, while lax regulations could lead to excessive risk-taking and potential crises. Regulatory compliance shapes investor behavior, influencing stock prices and market trends.

Keyphrases: Asset Quality, Banking Sector, Capital Markets, Financial health, Investor Confidence, central banks, compliance costs, economic stability, market liquidity, market reaction, monetary policy, regulatory changes, risk management, stress testing

@booklet{EasyChair:12442,
  author    = {Klaus Hubert},
  title     = {Regulatory Impact on Stock Prices: Capital Adequacy Requirements, Liquidity Ratios, and Other Regulatory Measures.},
  howpublished = {EasyChair Preprint 12442},
  year      = {EasyChair, 2024}}