BANKING SYSTEM REGULATION AND ITS INFLUENCE ON THE STABILIZATION OF BUSINESS CYCLES THROUGH MODELS OF MACROECONOMIC SCHOOLS AND CHANGE OF THE MACROECONOMIC PARADIGM
BANKING SYSTEM REGULATION AND ITS INFLUENCE ON THE STABILIZATION OF BUSINESS CYCLES THROUGH MODELS OF MACROECONOMIC SCHOOLS AND CHANGE OF THE MACROECONOMIC PARADIGM

Summary/Abstract: Research subject: – The paper researches into effects of the new banking system regulations on the stabilization of business cycles and strengthened resistance of banks, linking macroeconomic basis with functioning of macroeconomic models. The paper is based on: “Financial instability hypothesis” and “Theory of credit rationalizing”, through an analysis of the changed structures and standards for operations of banks, in light of the new regulatory frameworks and their interaction with the real economy activities (REA). Purpose – The purpose of this paper is to assess the first concrete results of the changes presented and foresee their effects on the future strengthening of the EU financial system and real sector, inclusive of possible pro-cyclical effects, through an analysis of the changes of the institutional structure of the EU and BH financial system supervision, and changes of the financial regulation and implementation of certain reforms. Methodology – The methodological framework of this research is based on a combination of qualitative and quantitative methods and results of previously published papers and researches, and offers their synthesis into a unique framework that is needed to reach definite conclusions. Conclusion – Partial banking system regulation, if not followed by adequate macroeconomic policy, may deepen the cyclic nature of the business cycles and lead to financial shocks.

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