Regulations, infrastructure and financial efficiency: evidence from 101 economies

Purpose This study aims to examine whether regulatory quality or information infrastructure better predicts financial system efficiency and investigate the pathway through which regulation translates into operational outcomes across 101 economies. Design/methodology/approach The World Bank B-READY 2025 data set is used to separately measure regulatory framework quality and public-service infrastructure as predictors of operational efficiency. OLS with HC3-robust standard errors is estimated across eight institutional variables and four income groups, with formal mediation analysis and robustness checks including region fixed effects and principal component digital infrastructure. Findings Payment interoperability rules and credit registry accessibility are the institutional variables most robustly associated with efficiency. Information infrastructure transmits approximately 29% of the total regulatory effect, consistent with partial mediation. A steep income gradient persists after controlling for all institutional variables. Decomposing efficiency reveals distinct channels: credit registry accessibility is associated with credit efficiency; payment interoperability rules are associated with payment efficiency. Research limitations/implications The cross-sectional design prevents causal identification. The sample is dominated by Europe and Central Asia, limiting generalisability. Practitioner-reported scores introduce measurement error. Panel rounds of B-READY will address these limitations. Practical implications Reform must sequence rule design alongside institutional delivery capacity. Regulatory sophistication without adequate information infrastructure yields limited efficiency gains, particularly in lower-income settings. Originality/value To the best of the authors’ knowledge, this is the first systematic cross-country study of financial efficiency using B-READY 2025, providing novel evidence on the mediation role of information infrastructure and on distinct institutional channels across income groups.