How have European banks developed along different dimensions of international competitiveness?

Florian Heider, Jan Pieter Krahnen, Jonas Schlegel and Loriana Pelizzon

No 112, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This study analyseswhy European banks, despite improved cost efficiency, continue to trade at lower valuations than their United States (US) counterparts. The gap stems from limited growth potential due to market fragmentation and underdeveloped capital markets. To close this competitiveness divide, the study calls for accelerating the Savings and Investment Union (SIU), expanding investment banking capacity, and implementing smart banking regulation and supervision that reinforces market discipline while enabling risk-taking within a stable, integrated European financial system. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the ECON Committee.

Keywords: European Banks; Bank Competitiveness; Market Fragmentation; Price to Book Ratio (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-eec and nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:319625

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