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Changes in the size and structure of the European Union banking sector-the role of competition between banks

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  • Malgorzata Pawlowska

Abstract

The aim of this paper is to present the changes in the banking sectors of European Union (EU) countries both before the last global financial crisis and during the crisis, with particular emphasis on the change in concentration and competition, in an attempt to determine the relationship between competition, concentration, and risk-taking by banks. This paper also addresses the current problems in the banking sector of the EU (i.e., banks are too-big-to-fail (TBTF)), and attempts to solving these problems within the framework of regulatory initiatives. The empirical results based on panel data analysis find that increasing the concentration and size of the banking sectors within EU-27 from the period 2006-2010 had a negative impact on financial stability. The results for competition are unambiguous, as competition had a positive impact on financial stability, mainly within the EU-12 banking sectors.

Suggested Citation

  • Malgorzata Pawlowska, 2015. "Changes in the size and structure of the European Union banking sector-the role of competition between banks," NBP Working Papers 205, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:205
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    References listed on IDEAS

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    1. John Vickers, 2012. "Some Economics of Banking Reform," 'Angelo Costa' Lectures Serie, SIPI Spa, issue Lect. XII.
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    8. Weill, Laurent, 2013. "Bank competition in the EU: How has it evolved?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 100-112.
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    Cited by:

    1. Leroy, Aurélien & Lucotte, Yannick, 2017. "Is there a competition-stability trade-off in European banking?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 199-215.
    2. Pawlowska, Malgorzata, 2016. "Does the size and market structure of the banking sector have an effect on the financial stability of the European Union?," The Journal of Economic Asymmetries, Elsevier, vol. 14(PA), pages 112-127.

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    More about this item

    Keywords

    banking and finance; market structure; competition; European Union (EU); banking regulations; panel data analysis; financial stability.;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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