DP4212 The Integration of EU Banking Markets

Author(s): Jordi Gual
Publication Date: January 2004
Keyword(s): banking, european union, market integration
JEL(s): F15, G20
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4212

The goal of this Paper is to provide an assessment of the EU policies that pursue the creation of a single banking market. The Paper evaluates the degree of integration of EU banking markets and discusses whether current policies are the most appropriate instruments for market integration. After comparing the key features of EU policy with alternative methods of market opening, the analysis stresses that market opening in regulated markets such as banking faces a difficult trade-off between respect for domestic preferences and the elimination of regulations that protect local competitors and are not justified on efficiency grounds. The Paper also provides an overview of recent research, which has looked at different indicators of market integration in EU banking. Finally, it analyses the impact of integration policies on the conduct, the structure and the performance of the banking industry.