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Deregulation and Convergence of Banking: The EU Experience

  • Paul Evans

    ()

    (Economics Department, Ohio State University)

  • Iftekhar Hasan

    ()

    (Rensselaer Polytechnic Institute and Bank of Finland)

  • Ana Lozano-Vivas

    ()

    (Dpto. De Teoría e Historia Económica, Facultad CC.EE, Universidad de Málaga)

In the last two decades, the European Union has undergone a major reduction in banking regulation. This paper investigates whether this deregulatory process was associated with increasing similarity, or convergence, of banking industries across the European Union. It reports that the deregulation at the national level and the opening of banking markets to international competition led to convergence, or greater similarity, of the banking industries’ main indicators of bank profitability or earning patterns, but not necessarily their asset-liability management practices. Overall, the deregulatory process appears to explain most of the changes that occurred in the dispersion of banking structure across the European Union.

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File URL: http://www.taloustieteellinenyhdistys.fi/images/stories/fep/fep22008_hasan.pdf
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Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

Volume (Year): 21 (2008)
Issue (Month): 2 (Autumn)
Pages: 104-117

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Handle: RePEc:fep:journl:v:21:y:2008:i:2:p:104-117
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  1. Subal Kumbhakar & Ana Lozano-Vivas, 2004. "Does deregulation make markets more competitive? Evidence of mark-ups in Spanish savings banks," Applied Financial Economics, Taylor & Francis Journals, vol. 14(7), pages 507-515.
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  7. Bhattacharya, S. & Boot, A.W.A. & Thakor, A.V., 1995. "The Economics of Bank Regulation," Papers 9516, Centro de Estudios Monetarios Y Financieros-.
  8. Laurent Weill, 2008. "Convergence in Banking Efficiency Across European Countries," Working Papers of LaRGE Research Center 2008-07, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
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  11. Hasan, Iftekhar & Marton, Katherin, 2003. "Development and efficiency of the banking sector in a transitional economy: Hungarian experience," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2249-2271, December.
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  15. Dietsch, Michel & Lozano-Vivas, Ana, 2000. "How the environment determines banking efficiency: A comparison between French and Spanish industries," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 985-1004, June.
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  17. Kok, Christoffer & Puigvert Gutiérrez, Josep Maria, 2006. "Euro area banking sector integration: using hierarchical cluster analysis techniques," Working Paper Series 0627, European Central Bank.
  18. Neven, Damien & Roller, Lars-Hendrik, 1999. "An aggregate structural model of competition in the European banking industry," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1059-1074, October.
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  21. Subal kumbhakar & Ana Lozano-Vivas, 2005. "Deregulation and Productivity: The Case of Spanish Banks," Journal of Regulatory Economics, Springer, vol. 27(3), pages 331-351, 01.
  22. Laurent Weill, 2007. "Is there a Gap in Bank Efficiency between CEE and Western European Countries?," Comparative Economic Studies, Palgrave Macmillan, vol. 49(1), pages 101-127, March.
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  24. Gual, Jordi & Neven, Damien J, 1992. "Deregulation of the European Banking Industry (1980-1991)," CEPR Discussion Papers 703, C.E.P.R. Discussion Papers.
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