IDEAS home Printed from https://ideas.repec.org/a/boe/qbullt/0157.html
   My bibliography  Save this article

Why is the UK banking system so big and is that a problem?

Author

Listed:
  • Bush, Oliver

    (Bank of England)

  • Knott, Samuel

    (Bank of England)

  • Peacock, Chris

    (Bank of England)

Abstract

Over the past 40 years the size of the UK banking system has grown dramatically and under plausible assumptions it could continue to grow rapidly. This article examines a number of issues related to the size of the UK banking system, including why it is so big and what empirical evidence tells us about the relationship between banking system size and financial stability. This evidence suggests that while size can be important, it is the resilience of the banking system that is key for financial stability.

Suggested Citation

  • Bush, Oliver & Knott, Samuel & Peacock, Chris, 2014. "Why is the UK banking system so big and is that a problem?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(4), pages 385-395.
    • Handle: RePEc:boe:qbullt:0157
    as

    Download full text from publisher

    File URL: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/why-is-the-uk-banking-system-so-big-and-is-that-a-problem.pdf?la=en&hash=F7DD8DA63A43C54BF1456EFF89EBA7117C6AAEBD
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Reint Gropp & Christian Gruendl & Andre Guettler, 2014. "The Impact of Public Guarantees on Bank Risk-Taking: Evidence from a Natural Experiment," Review of Finance, European Finance Association, vol. 18(2), pages 457-488.
    2. repec:bla:econom:v:71:y:2004:i:284:p:543-558 is not listed on IDEAS
    3. Crafts, Nicholas & Wolf, Nikolaus, 2014. "The Location of the UK Cotton Textiles Industry in 1838: A Quantitative Analysis," The Journal of Economic History, Cambridge University Press, vol. 74(4), pages 1103-1139, December.
    4. Jean Arcand & Enrico Berkes & Ugo Panizza, 2015. "Too much finance?," Journal of Economic Growth, Springer, vol. 20(2), pages 105-148, June.
    5. Noss, Joseph & Sowerbutts, Rhiannon, 2012. "Financial Stability Paper No 15: The implicit subsidy of banks," Bank of England Financial Stability Papers 15, Bank of England.
    6. Tucker, Paul & Hall, Simon & Pattani, Aashish, 2013. "Macroprudential policy at the Bank of England," Bank of England Quarterly Bulletin, Bank of England, vol. 53(3), pages 192-200.
    7. Farag, Marc & Harland , Damian & Nixon, Dan, 2013. "Bank capital and liquidity," Bank of England Quarterly Bulletin, Bank of England, vol. 53(3), pages 201-215.
    8. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    9. Brandao-Marques, L. & Correa, R. & Sapriza, H., 2012. "International Evidence on Government Support and Risk-Taking in the Banking Sector," Other publications TiSEM 4a9756af-eb63-4867-ae29-3, Tilburg University, School of Economics and Management.
    10. Hoggarth, Glenn & Hooley, John & Korniyenko, Yevgeniya, 2013. "Financial Stability Paper No 22: Which way do foreign branches sway? Evidence from the recent UK domestic credit cycle," Bank of England Financial Stability Papers 22, Bank of England.
    11. Gracie, Andrew & Chennells, Lucy & Menary, Mark, 2014. "The Bank of England’s approach to resolving failed institutions," Bank of England Quarterly Bulletin, Bank of England, vol. 54(4), pages 409-418.
    12. Mr. Fabian Valencia & Mr. Luc Laeven, 2012. "Systemic Banking Crises Database: An Update," IMF Working Papers 2012/163, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zachary Feinstein, 2017. "Harry Potter and the Goblin Bank of Gringotts," Papers 1703.10469, arXiv.org.
    2. Jamal Ouenniche & Skarleth Carrales, 2018. "Assessing efficiency profiles of UK commercial banks: a DEA analysis with regression-based feedback," Annals of Operations Research, Springer, vol. 266(1), pages 551-587, July.
    3. Jan-Pieter Krahnen & Felix Noth & Ulrich Schüwer, 2017. "Structural Reforms in Banking: The Role of Trading," Journal of Financial Regulation, Oxford University Press, vol. 3(1), pages 66-88.
    4. Leone Leonida & Eleonora Muzzupappa, 2018. "Do Basel Accords influence competition in the banking industry? A comparative analysis of Germany and the UK," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(1), pages 64-72, January.
    5. van der Kwaak, Christiaan & Madeira, João & Palma, Nuno, 2023. "The long-run effects of risk: an equilibrium approach," European Economic Review, Elsevier, vol. 153(C).
    6. Burrows, Oliver & Cumming, Fergus, 2015. "Mapping the UK financial system," Bank of England Quarterly Bulletin, Bank of England, vol. 55(2), pages 114-129.
    7. Victor Ekpu & Alberto Paloni, 2015. "Financialisation, Business Lending And Profitability In The Uk," Working Papers 2015_18, Business School - Economics, University of Glasgow.
    8. Löher, Jonas & Schröder, Christian, 2017. "Einfluss des Regionalbankensystems auf die Mittelstandsfinanzierung," IfM-Materialien 267, Institut für Mittelstandsforschung (IfM) Bonn.
    9. Eleonora Muzzupappa, 2024. "Competition and Regulation: The Case of the UK Banking Industry," Mathematics, MDPI, vol. 12(8), pages 1-10, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Boris Cournède & Oliver Denk & Peter Hoeller, 2015. "Finance and Inclusive Growth," OECD Economic Policy Papers 14, OECD Publishing.
    2. Casiraghi, Marco, 2020. "Bailouts, sovereign risk and bank portfolio choices," Journal of Banking & Finance, Elsevier, vol. 119(C).
    3. Lo Turco, Alessia & Maggioni, Daniela & Zazzaro, Alberto, 2019. "Financial dependence and growth: The role of input-output linkages," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 308-328.
    4. Wang, Li & Menkhoff, Lukas & Schröder, Michael & Xu, Xian, 2019. "Politicians’ promotion incentives and bank risk exposure in China," Journal of Banking & Finance, Elsevier, vol. 99(C), pages 63-94.
    5. Joya, Omar, 2015. "Growth and volatility in resource-rich countries: Does diversification help?," Structural Change and Economic Dynamics, Elsevier, vol. 35(C), pages 38-55.
    6. Samargandi, Nahla & Fidrmuc, Jan & Ghosh, Sugata, 2015. "Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries," World Development, Elsevier, vol. 68(C), pages 66-81.
    7. Bremus, Franziska & Ludolph, Melina, 2021. "The nexus between loan portfolio size and volatility: Does bank capital regulation matter?," Journal of Banking & Finance, Elsevier, vol. 127(C).
    8. repec:spo:wpmain:info:hdl:2441/4712tvppdq9m6q5i7t579thpvf is not listed on IDEAS
    9. Ng, Adam & Dewandaru, Ginanjar & Ibrahim, Mansor H., 2015. "Property rights and the stock market-growth nexus," The North American Journal of Economics and Finance, Elsevier, vol. 32(C), pages 48-63.
    10. Aiyar, Shekhar & Duval, Romain & Puy, Damien & Wu, Yiqun & Zhang, Longmei, 2018. "Growth slowdowns and the middle-income trap," Japan and the World Economy, Elsevier, vol. 48(C), pages 22-37.
    11. Jérôme Creel & Paul Hubert & Fabien Labondance, 2017. "Financialisation risks and economic performance," Working Papers hal-03471756, HAL.
    12. Alexander Herman & Alexander Klemm, 2019. "Financial Deepening in Mexico," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(11), pages 5-18, January.
    13. Mercè Sala-Rios & Teresa Torres-Solé & Mariona Farré-Perdiguer, 2016. "Credit and business cycles’ relationship: evidence from Spain," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 15(3), pages 149-171, December.
    14. Cheah, Chee Keong & Masih, Mansur, 2017. "Does the growth of islamic bank financing depend on stock market growth? evidence from Malaysia," MPRA Paper 106192, University Library of Munich, Germany.
    15. Dirk Schoenmaker & Dewi Werkhoven, 2013. "The Impact of Multinationals on the Size of the Banking System," Kyklos, Wiley Blackwell, vol. 66(3), pages 378-397, August.
    16. Florian Morvillier, 2018. "The role of exchange rate undervaluations on the inflation-growth nexus," Working Papers hal-04141804, HAL.
    17. Christopher F. Baum & Caterina Forti Grazzini & Dorothea Schäfer, 2020. "Institutional Diversity in Domestic Banking Sectors and Bank Stability: A Cross-Country Study," Discussion Papers of DIW Berlin 1869, DIW Berlin, German Institute for Economic Research.
    18. repec:spo:wpmain:info:hdl:2441/f6h8764enu2lskk9p5296ie95 is not listed on IDEAS
    19. Patricia Palhau Mora, 2018. "The “Too Big to Fail” Subsidy in Canada: Some Estimates," Staff Working Papers 18-9, Bank of Canada.
    20. Osvaldo Lagares, 2016. "Capital, Economic Growth and Relative Income Differences in Latin America," Discussion Papers 16/03, Department of Economics, University of York.
    21. repec:hal:wpspec:info:hdl:2441/f6h8764enu2lskk9p5296ie95 is not listed on IDEAS
    22. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    23. Creel, Jérôme & Hubert, Paul & Labondance, Fabien, 2015. "Financial stability and economic performance," Economic Modelling, Elsevier, vol. 48(C), pages 25-40.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:boe:qbullt:0157. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publications Group (email available below). General contact details of provider: https://edirc.repec.org/data/boegvuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.