134 EuroMed J. Management, Vol. 4, No. 2, 2022 Copyright © 2022 Inderscience Enterprises Ltd. Progress or missed opportunity: regulation and bank stability in South European countries Saima Mehzabin Department of Business and Technology Management, Islamic University of Technology, Gazipur 1704, Bangladesh Email: saimamehzabin@iut-dhaka.edu Md. Yousuf Chief Economist’s Unit, Bangladesh Bank, Head Office, Dhaka 1000, Bangladesh and Graduate School of International Cooperation and Studies, Kobe University, 1-1, Rokkodai-cho, Nada-ku, Kobe, 657-8501, Japan Email: md.yousuf@bb.org.bd Peter Wanke Business Analytics and Economics Research Unit – COPPEAD, Graduate Business School, Rua Paschoal Lemme, 355. 21949-900, Brazil Email: peter@coppead.ufrj.br Md. Abul Kalam Azad* Department of Business and Technology Management, Islamic University of Technology, Gazipur 1704, Bangladesh Email: kalam@iut-dhaka.edu *Corresponding author Abstract: Bank regulation as well as a country’s macroeconomic regulations have been hindering bank profitability by ensuring higher bank capital and minimum holding of risks for achieving bank stability. The objective of this study is to determine the influence of internal and external factors on the stability of the banking sector in five South European countries i.e., Croatia, Italy, Portugal, Slovenia, Spain. This paper utilises panel data estimations using the bank sector of five South European countries during the time period of 2010 to 2020. The paper is guided by the hypothesis that adequate capital ratio, strong country governance and increased bank size have significant impact on the stability of banking sector. The findings of the regression analysis reveals