Deregulation and convergence of banking: the EU experience

In the last two decades, the European Union has undergone a major reduction in banking regulation. This paper investigates whether this deregulatory process was associated with increasing similarity, or convergence, of banking industries across the European Union. It reports that the deregulation at...

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Bibliographic Details
Published in:Finnish Economic Papers 2008-10, Vol.21 (2), p.104-117
Main Authors: Evans, Paul, Hasan, Iftekhar, Lozano-Vivas, Ana
Format: Article
Language:English
Subjects:
Asset liability management
Bank failures
Bank management
Bank regulation
Banking industry
Banking system
Banks
Competition
Convergence
Deposit insurance
Deregulation
Efficiency
Europe
Hypotheses
Interest rates
International competition
Liberalization
Moral hazard
Profitability
Regional analysis
Regulation of financial institutions
Reserve requirements
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Summary:In the last two decades, the European Union has undergone a major reduction in banking regulation. This paper investigates whether this deregulatory process was associated with increasing similarity, or convergence, of banking industries across the European Union. It reports that the deregulation at the national level and the opening of banking markets to international competition led to convergence, or greater similarity, of the banking industries' main indicators of bank profitability or earning patterns, but not necessarily their asset-liability management practices. Overall, the deregulatory process appears to explain most of the changes that occurred in the dispersion of banking structure across the European Union. (JEL: G21, G28, E44) Reprinted by permission of Finnish Society for Economic Research
ISSN:0784-5197
1798-7423