Abstract
Banks (and credit unions) in Europe, US and Canada are regulated entities. The regulatory authorities adopt and adapt the Basel global standards to their financial systems to ensure that banks are sound and resilient. Banks are required to operate with a minimum capital requirement, hold sufficient liquid assets and to be resilient to extreme shock scenarios. Credit unions are also regulated using an equivalent approach but generally much less stringency applies in the conduct of business. Depending on its business model, ownership structure and size, banks and other financial institutions respond differently to regulation and regulatory metrics that are not calibrated to their business models. The differences in their response contribute to better understand the stability and safety of the financial system. This chapter presents the regulatory indicators used and shows the results of how business models of banks and credit unions in Europe, US and Canada respond to regulation.
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