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The Global Investment Banks are now all Becoming American: Does that Matter for Europeans?

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  • Charles Goodhart
  • Dirk Schoenmaker

Abstract

In the aftermath of the global financial crisis, the market share of US investment banks is rising, while that of their European counterparts is declining. We present evidence that US investment banks are on the verge of taking over pole position in European investment banking. While the US players have thus become dominant in Europe, China has taken matters into its own hands. Since 2015, Chinese investment banks have overtaken the position of American and European investment banks in the Asian-Pacific market.Credit rating agencies and investment banks are the gatekeepers of the Capital Markets Union. The supervisory agencies in Europe can effectively supervise the European operations of these US managed players. We discuss the consequences of Brexit. On the political side, we suggest that the European Commission should keep on viewing its, albeit declining, banking industry as a strategic sector. The Commission, the European Central Bank and the Bank of England should jointly develop a strategic agenda for the EU–US Regulatory Dialogue.Finally, corporates rely on investment banks to issue new securities. We recommend that the big European corporates should cherish the (few) remaining European investment banks, by giving them at least one place in a further US dominated banking syndicate. That could help to avoid complete dependence on US investment banks.

Suggested Citation

  • Charles Goodhart & Dirk Schoenmaker, 2016. "The Global Investment Banks are now all Becoming American: Does that Matter for Europeans?," Journal of Financial Regulation, Oxford University Press, vol. 2(2), pages 163-181.
    • Handle: RePEc:oup:refreg:v:2:y:2016:i:2:p:163-181.
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    File URL: http://hdl.handle.net/10.1093/jfr/fjw012
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    1. Ringe, Wolf-Georg, 2016. "Regulatory Competition in Global Financial Markets — The Case for a Special Resolution Regime," Annals of Corporate Governance, now publishers, vol. 1(3), pages 175-247, August.
    2. Dirk Schoenmaker & Nicolas Véron, . "European banking supervision- the first eighteen months," Blueprints, Bruegel, number 14868.
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    6. Avgouleas, Emilios & Goodhart, Charles & Schoenmaker, Dirk, 2013. "Bank Resolution Plans as a catalyst for global financial reform," Journal of Financial Stability, Elsevier, vol. 9(2), pages 210-218.
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    Cited by:

    1. Dirk Schoenmaker, 2018. "Resolution of international banks: Can smaller countries cope?," International Finance, Wiley Blackwell, vol. 21(1), pages 39-54, March.
    2. Wendy A. Bradley & Gilles Duruflé & Thomas F. Hellmann & Karen E. Wilson, 2019. "Cross-Border Venture Capital Investments: What Is the Role of Public Policy?," JRFM, MDPI, vol. 12(3), pages 1-22, July.
    3. Elisabeth Paulet & Hareesh Mavoori, 2019. "Globalization, regulation and profitability of banks: a comparative analysis of Europe, United States, India and China," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 16(2), pages 127-170, December.
    4. Uuriintuya Batsaikhan & Robert Kalcik & Dirk Schoenmaker, 2017. "Brexit and the European financial system," Policy Contributions 18984, Bruegel.
    5. Chen Su & Hanxiong Zhang & Robert S. Hudson, 2020. "The time‐varying performance of UK analyst recommendation revisions: Do market conditions matter?," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 29(2), pages 65-89, May.

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    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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