Business Models and Banking Regulation Are Going Forward

Purpose: The study aims to summarize the level of knowledge and to correlate published material regarding banking business models. A second aim is to answer the question if European countries have different banking business models, especially in countries that have adopted euro currency and countries that have not adopted it yet. Design/Methodology/Approach: We consider the Liikanen report (2012) and we performed a literature review ex-ante and ex-post above this report using selective criteria. In addition we have completed a study case comparing performance and efficiency indicators (ROE, ROA, and CIR) and profit sources (Net interest income, total operating income, net fee and commission to total operating income, trading income to total operating income) of the banking system from European Union countries correlating the results with the business model terminology. Findings: From the literature review, we observe that it is a consentient view that the retail banking business model, based on traditional funding, is one of the most reliable business models during a financial crisis. Moreover, the reviewed studies empirically proved that the banks that migrate to retail business model from another business model improved their efficiency and profitability. We concluded that the countries that are out of the monetary union and are in the emerging economy stage along with the countries that are in the cluster of late monetary union have retail banking models and are the most efficient. Practical Implications: An analytical appraisal of the published material completed with the practical study case regarding EU banking systems is paramount for a future quantitative research study. Originality/Value: The literature review is valuable both for future researches and for managerial perspective regarding banking business model appraisal.