Competition issues in European banking

Barbara Casu (Cass Business School, City University London, London, UK)
Claudia Girardone (Essex Business School, University of Essex, Colchester, UK)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Publication date: 8 May 2009



The purpose of this paper is to assess the outcome of European Union (EU) deregulation and competition policies on the competitive conditions of the main EU banking markets.


After a review of deregulation and competitition policies in the EU banking industry, the degree of competition in the largest five EU banking markets using is tessted both structural (concentration ratios and Herfindahl‐Hirshman indices) and non‐structural (H‐statistics and Lerner index) approaches.


Results indicate that EU banking markets are becoming progressively more concentrated and that there is no evidence of an increase in competitive pressure. Country differences are also apparent thereby indicating that despite the sustained regulatory interventions, significant barriers to the integration of EU retail banking markets remain. In line with recent literature, the analysis also seems to provide further evidence that concentration is not necessarily a good proxy for competition.


Increased market concentration and its effects on competition are of relevance in a period of renewed EU regulatory efforts to remove the remaining barriers to the integration of financial markets. The evaluation of competitive conditions and market power in EU banking are therefore of interest to policy‐makers and regulators.



Casu, B. and Girardone, C. (2009), "Competition issues in European banking", Journal of Financial Regulation and Compliance, Vol. 17 No. 2, pp. 119-133.

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