Kapitalreglering - Finansmarknadernas räddning, eller bara ett spel för galleriet?
Background: The regulation of banks is increasing in order to stabilize the financial market. Despite this increase in regulation, financial crises still continue to occur. The Basel Committee on Banking Supervision is gradually increasing the capital requirements for banks, yet the increase in capital requirements doesn?t seem to solve the problem. This raises the question: how does capital regulation affect banks? Purpose: The purpose of this study is, primarily to illustrate the effects that capital regulation has on risk and efficiency on banks within the European Union, but secondary also study the relationship between risk, efficiency and capital regulation.Method: To achieve the purpose of this study, a deductive approach has been used, where the problem is assumed to be due to an agency problem. The agency problem is expected to occur due to the intermediation approach and profit maximization is set against portfolio choice theory and the regulatory hypothesis. The research method is based on a quantitative method using panel data from commercial banks within the European Union, between the years 2005 ? 2012.Conclusions: Regulation of bank on one hand and profit maximization on the other, will drive one eternal circle flow between regulation, risk and efficiency. Thus, the banks Moral Hazard behavior has to be stopped if the capital regulation is to have any real effect.