The global financial crisis 2007-2008 has brought many issues into the light and led to a profound questioning about the existing prudential regulations. This dissertation consists of three essays on banking supervision and systemic risk with common themes which are: (i) to evaluate the effectiveness of capital regulations, (ii) to provide important insights to regulators and banks for understanding and monitoring risks, and (iii) to suggest new techniques and frameworks to improve micro and macro prudential supervisions. The three chapters attempt to achieve these goals from different angles. Chapter 1 is an empirical study assessing how capital regulations impact U.S. banks' capital ratios, risk-taking and performance (proxied by the cost efficiency). The analysis is based on standard models taken from the banking and finance literature but with added attention paid to specifying possible cost inefficiencies in the provision of intermediation services. Chapter 2 moves into more methodological innovations of Chapter 1 research questions and focuses on a spatial panel analysis of financial interconnectness of U.S. banks. Chapter 3 employs network approaches to examine contagion within the financial network, which are able to provide visual and analytical representation of exposures not evident in standard economic models.