If there was no punishment system, the game wouldn't be as toxic as it is.
Has toxicity gone down due to Riot punishing its players for being "toxic"? From my experience that answer is no and i will try to prove why this answer is no.
Lets start by taking a look at the history of "punishment". Punishment: is a term used in operant conditioning to refer to any change that occurs after a behavior, that in theory reduces the likelihood that that behavior will occur again in the future. Now the problem with this is that punishment doesn't always stop the undesired behavior. Why is it that punishment seems to work in some instances, but not in others? Researchers have found a number of factors that contribute to how effective punishment is in different situations. First, punishment is more likely to lead to a reduction in behavior if it immediately follows the behavior. Which the new system is much better at.
Ok so there must be more to why this system clearly isn't working. So other research on how to make it more effective states, punishment achieves greater results when it is consistently applied. Ok so, the system seemingly is doing this for toxic chat, but wait, what consistently applies punishment to people who don't make it so obvious that they are trolling. From what I see they only consistently punish players for bad language or hateful remarks or even calling players noobs and trolls... Also from my experience this bad language usually only occurs after players purposely do something to another player using their gameplay, so called "trolling". So the problem with the system is it is only trying to mask the real issue at hand. The only way to stop the anger of the players, is to stop the source of the frustration, not by just silencing the frustrated players. The problem here is that the system has a major flaw, the theory behind it is seemingly on the right track but in order to consistently punish deemed "bad" behavior, you have to punish everyone involved. This does not happen right now. When the system is flawed and you anger people by punishing only one source of deemed "bad" behavior, these same people are going to come back and abuse the system until it is fixed.
In order for this system to work properly ALL forms of "bad" behavior must be punished or they shouldn't be punishing at all. This is the exact reason there are more and more trolls and it is getting harder and harder for players to keep their patience, because we can see that the system is not working, having to deal with the flaws of this system is actually causing more frustration then there was in the first place.