<p>The impact of real estate regulation on bank stock market returns is a relatively unaddressed area of research. To the extent that banks are major lenders to this segment, it remains a moot issue as to whether changes in real estate regulation affect this behaviour. To address this issue, we integrate daily data spanning December 2015 to July 2017, subsuming the enactment of a major real estate regulation by the Indian authorities on stock returns and trading volumes, including the differential responses across bank ownership. Using an event study methodology, the evidence reveals that while the legislation prompted a sector-wide reassessment of risk, the effects were unevenly distributed across ownership structures, reflecting differences in real estate exposure, regulatory expectations and investor perception. Overall, these findings provide important insights into the transmission of sector-specific regulatory reforms to the financial sector, with significant implications for financial stability and intermediation in emerging market contexts, underscoring the relevance and usefulness of this research.</p>