Prudential Regulation and Financial Information in Spanish Banks: 1995-2015

Abstract

In this paper we seek to ascertain whether the changes in prudential financial regulation in Spain in the period 1995–2015 have had an effect on financial stability and whether this can be assessed for Spain from the behavior of the z-score and the LLP variables, as has been done elsewhere. We analyze the implementation of the statistical or dynamic provision in 2000 and also the adoption of the Basel II agreement in 2008. The sample analyzed comprises 48 Spanish banks. As our main conclusions, we provide evidence that the changes that have taken place in prudential financial regulation in Spain cannot be adequately analyzed and interpreted with the behavior of the z-score and LLP variables for that period, since in this context they are not good indicators of greater or lesser financial stability due to interference from the Spanish banking regulator.