Integration and consolidation in EU banking - an unfinished business

Christoph Walkner and Jean-Pierre Raes

No 226, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: The objective of this paper is to review the obstacles to cross-border integration and consolidation, which confront banks operating within the EU. Theoretical and empirical evidence supports the view that integration and consolidation in the banking sector can enhance overall economic performance via macroeconomic stabilisation, higher levels of efficiency and consumer welfare. While in recent years only slow progress has been recorded in EU cross-border banking integration, a substantial consolidation in the Member State's national banking sectors has occurred leading to rising domestic concentration ratios implying greater efficiency but potentially limiting welfare gains. The lack of progress in cross-border integration can be attributed to various factors, including national differences in market practices, regulation and taxation. A fairly comprehensive list of existing obstacles is provided and their impact on the main avenues for cross-border banking integration is examined, namely on (i) organic growth in the form of foreign branches and subsidiaries, (ii) cross-border mergers and acquisitions and (iii) cross-border provision of banking services. In addition, the role of institutional factors relating to the framework for prudential supervision is considered, notably in the context of the relationship of home and host country supervisors with each other and with market participants. While the highlighted issues are of general relevance in the context of EU financial integration, they might be of special significance in the context of the recently acceded Member States and their largely foreign owned banking system.

Keywords: Banking; banking integration; banking consolidation; cross-border banking; Walkner; Raes; intergation and consolidation in EU banking; EU banking (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://ec.europa.eu/economy_finance/publications/pages/publication662_en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:euf:ecopap:0226

Access Statistics for this paper

More papers in European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission Contact information at EDIRC.
Bibliographic data for series maintained by ECFIN INFO ().