Competition issues in European banking
Abstract
Purpose
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.
Design/methodology/approach
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.
Findings
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.
Originality/value
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.
Keywords
Citation
Casu, B. and Girardone, C. (2009), "Competition issues in European banking", Journal of Financial Regulation and Compliance, Vol. 17 No. 2, pp. 119-133. https://doi.org/10.1108/13581980910952568
Publisher
:Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited