Is Europe Overbanked?

Marco Pagano, Sam Langfield, Viral Acharya, Arnoud Boot, Markus Brunnermeier, Claudia Buch, Martin F. Hellwig, André Sapir and Ieke van den Burg

No 4, Report of the Advisory Scientific Committee from European Systemic Risk Board

Abstract: Banking has grown too much in Europe - in three senses. First, the European banking system has reached a size where its contribution to real economic growth is likely to be nil or negative. Second, the European financial structure is biased towards banks (rather than securities markets), which results in excessively volatile credit creation and lower economic growth. Third, large universal banks - which perform a wide range of banking services, and are peculiarly common in Europe - contribute more to systemic risk than small and narrowly focused banks. To deal with these problems, policymakers should consider new measures such as aggressive anti-trust policy, structural reform of the banking sector, and a capital markets union to address Europe's overbanking problem. JEL Classification: G10, G20

Keywords: banks; financial structure; systemic risk; universal banks; bank regulation (search for similar items in EconPapers)
Date: 2014-06
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Citations: View citations in EconPapers (30)

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