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Efficiency Gains of a European Banking Union

Author

Listed:
  • Dirk Schoenmaker

    (Duisenberg School of Finance)

  • Arjen Siegmann

    (VU University Amsterdam)

Abstract

An anticipated benefit of the prospective European Banking Union is stronger supervision of European banks. Another benefit would be enhanced resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority would follow a supranational approach, under which domestic and cross-border effects within Europe are incorporated. Using a model of recapitalising banks, this paper develops indicators to measure the efficiency improvement of resolution. Next, these efficiency indicators are applied to the hypothetical resolution of the top 25 European banks, which count for the vast majority of cross-border banking in Europe. Our cost-benefit analysis indicates that the UK, Spain, Sweden, and the Netherlands are the main beneficiaries and thus have the largest economic incentives to join Europe’s Banking Union.

Suggested Citation

  • Dirk Schoenmaker & Arjen Siegmann, 2013. "Efficiency Gains of a European Banking Union," Tinbergen Institute Discussion Papers 13-026/IV/DSF51, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20130026
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    File URL: https://papers.tinbergen.nl/13026.pdf
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    References listed on IDEAS

    as
    1. Schoenmaker, Dirk & Siegmann, Arjen, 2014. "Can European bank bailouts work?," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 334-349.
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    Cited by:

    1. Marius A. Zoican & Lucyna A. Górnicka, 2013. "Banking Unions: Distorted Incentives and Efficient Bank Resolution," Tinbergen Institute Discussion Papers 13-184/VI, Tinbergen Institute, revised 16 May 2014.
    2. Vasile COCRIS & Igor TURCANU & Stanislav PERCIC, 2014. "Towards A European Banking Union: Risks And Challenges," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 14, pages 219-227, December.
    3. Belke, Ansgar & Dobrzańska, Anna & Gros, Daniel & Smaga, Paweł, 2016. "(When) should a non-euro country join the banking union?," The Journal of Economic Asymmetries, Elsevier, vol. 14(PA), pages 4-19.
    4. Thorsten Beck & Wolf Wagner, 2016. "Supranational Supervision: How Much and for Whom?," International Journal of Central Banking, International Journal of Central Banking, vol. 12(2), pages 221-268, June.
    5. Marius Andrei Zoican & Lucyna Anna Gornicka, 2014. "Banking Union Optimal Design under Moral Hazard," 2014 Papers pzo33, Job Market Papers.

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    More about this item

    Keywords

    Financial Stability; Financial Crises; Public Good; International Banking;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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