What Are Borders Made of? An Analysis of Barriers to European Banking Integration

Massimiliano Affinito and Matteo Piazza ()
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Matteo Piazza: Economic Research and International Relations Area of the Bank

Chapter 9 in The Changing Geography of Banking and Finance, 2009, pp 185-211 from Springer

Abstract: Abstract Linguistic and cultural differences, different legal and supervisory frameworks, and relationship lending have been repeatedly mentioned as barriers to European retail banking integration. We investigate whether these barriers have affected integration within national boundaries, using an index of localism of regional banking systems as a measure of market integration. If local banks are established and flourish because asymmetric information makes entry difficult for non-incumbents (Dell’Ariccia 2001) or regulatory and governance rules prevent entry from outside (Berger et al. 1995), we should find a significant relationship between indicators of these barriers and measures of the localism of banking systems. Our results show that this is indeed the case for asymmetric information, while findings are more blurred for supervisory practices.

Keywords: Banking System; Euro Area; Asymmetric Information; Foreign Bank; Credit Institution (search for similar items in EconPapers)
Date: 2009
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Working Paper: What are borders made of? An analysis of barriers to European banking integration (2008)
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DOI: 10.1007/978-0-387-98078-2_9

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