This research investigates whether banks that adopted new regulatory requirements earlier, such as Basel III, are more profitable, as well as more efficient, than banks that adopted these requirements later. In addition, all 138 banks are based in the G7 member countries, which are the most developed countries in the world. Also, banks are categorized into early and late adopters based on Basel III Leverage Ratio performance by using Fitch Connect. Moreover, profitability ratios, such as the Return on Equity, Return on Assets and efficiency ratio Operating Efficiency, were collected from Fitch Connect to analyze if early adopters were more profitable and efficient than the late adopters. Also, STATA is used to analyze descriptive statistics and a univariate analysis of both groups. Furthermore, the finding is that early adopters of the Basel III Leverage Ratio are not the more profitable or efficient firms compared to late adopters as anticipated. In addition, the results of early and late adopters do not differ that much in the analysis regarding profitability and efficiency ratios. This implies that it is not necessarily correct to assume that stricter regulation, such as Basel III, will negatively affect the profitability or efficiency of banks. In addition, these results are useful to regulators and policymakers of the G7 member countries for two reasons. Also, regulators can clearly see how banks are adopting new stricter regulation.

Purpose: The relationship between the macroeconomic environment and banking risks is one of the basic conditions for the stability of the state financial system. The purpose of this paper is to show the interdependence between the macroeconomic environment and the financial system, i.e., to highlight the importance of various macroeconomic factors and their impact on the banking system in Croatia. Methodology: Statistical data for the period from 2010 to 2022, obtained from publicly available databases, are analysed. Correlation analysis was performed to determine the intensity and direction of the relationship between macroeconomic and banking variables. Regression analysis was conducted to determine if macroeconomic variables could explain some of the changes in banking variables. Results: The results of the analysis show a significant correlation between the macroeconomic variable unemployment rate and all banking variables, as well as between the macroeconomic variable inflation rate and the banking variables: non-performing loans (NPL) and bank loans. Gross domestic product (GDP) is not correlated with any of the observed variables, which is a very interesting result. The unemployment rate is the predictor that is significant for all banking variables, while the inflation rate is the predictor that is significant only for non-performing loans. Conclusion: The conducted analyses show that economic development plays a role in the business policies of banks. These results can be particularly useful for bank management and the government, as they provide all stakeholders with important information about the role of macroeconomic policies of financial institutions in Croatia and, consequently, the Croatian economy.