Analysis of the evolution of banking sector stability in Europe since the global financial crisis

The period of the global financial crisis followed by the sovereign debt crisis represents the strongest period of recession in Europe since the Great Depression in 1929. The response by regulators and politics were extensive regulatory reforms that influence the banking sector massively. This thesis has the purpose to describe how banking sector stability can be defined, why regulation is necessary in the banking sector and to shed light on the complicated system of the resulting regulatory institutions in Europe by means of a qualitative literature research. In addition, this thesis evaluates the effectiveness of the current regulatory reforms and the current state of banking sector stability on the basis of a quantitative analysis of risk indicators with respect to the newly introduced regulations. It can be concluded that the regulatory reforms are an improvement in stability enhancement with potential for more improvement, however. Individual banks’ stability has also improved, whereas stability in the whole banking sector cannot be considered as much greater