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The changing landscape of financial markets in Europe, the United States and Japan

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  • Michiel Bijlsma
  • Gijsbert Zwart

Abstract

We compare the structure of the financial sectors of the EU27, Japan and the United States, looking at a set of 23 indicators. We find a large variation within the European Union in the structure of the financial sector. Using principal components analysis, we identify robust groups of EU countries. One group consists of the Eastern European members that entered the EU more recently. These have substantially smaller financial sectors than the old member states. A second group can be classified as market-based (MBEU) and the third group is more bank-based (BBEU). We compare US, MBEU, BBEU, Eastern EU and Japan with the following main results. First, the groups within Europe are geographically related. Second, in many indicators, MBEU countries are closer to the (market-based) US, while BBEU countries more closely resemble Japan. Paradoxically, however, market-based EU countries also have large banking sectors. Banks in market-based countries have larger cross-border assets and liabilities, and derive a larger fraction of their income from fees, rather than interest income, than banks in bank-based countries. Finally, for most indicators, the ordering of groups of countries is quite stable over time, but while the crisis has had no impact on the relative ordering of the groups, it has slightly widened the gap between the US and all EU regions in some respects. We also find that during the crisis, substitution between marketbased and bank-based sources of finance occurred in the US, and to a lesser extent in MBEU and BBEU countries. Key words: Financial sector structure, market-based, bank-based, principal components analysis

Suggested Citation

  • Michiel Bijlsma & Gijsbert Zwart, 2013. "The changing landscape of financial markets in Europe, the United States and Japan," CPB Discussion Paper 238, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:238
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    Cited by:

    1. Vincenzo Cuciniello & Federico M. Signoretti, 2015. "Large Banks, Loan Rate Markup, and Monetary Policy," International Journal of Central Banking, International Journal of Central Banking, vol. 11(3), pages 141-177, June.
    2. Kappler, Marcus & Schleer, Frauke, 2017. "A financially stressed euro area," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 11, pages 1-37.
    3. Natasha Kalara & Lu Zhang, 2018. "The changing landscape of firm financing in Europe, the United States and Japan," CPB Discussion Paper 383, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Michiel Bijlsma & Andrei Dubovik, 2014. "Banks, Financial Markets and Growth in Developed Countries: a Survey of the empirical literature," CPB Discussion Paper 266, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Michiel Bijlsma & Ferry Haaijen & Casper van Ewijk, 2014. "Economic growth and funded pension systems," CPB Discussion Paper 279.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Maik Huettinger & Agnė Krašauskaitė, 2019. "Will MiFID II tame the investment services industry of the Baltic Tigers?," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 12(3), pages 315-331, November.
    7. Flögel, Franz & Gärtner, Stefan, 2018. "The banking systems of Germany, the UK and Spain form a spatial perspective: The German case," IAT Discussion Papers 18/04, Institut Arbeit und Technik (IAT), Westfälische Hochschule, University of Applied Sciences.
    8. Martin Hodula, 2018. "Off the Radar: Exploring the Rise of Shadow Banking in the EU," Working Papers 2018/16, Czech National Bank.
    9. Schleer, Frauke & Semmler, Willi, 2015. "Financial sector and output dynamics in the euro area: Non-linearities reconsidered," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 235-263.
    10. Ongena, Steven & Schindele, Ibolya & Vonnák, Dzsamila, 2021. "In lands of foreign currency credit, bank lending channels run through?," Journal of International Economics, Elsevier, vol. 129(C).
    11. Flögel, Franz & Gärtner, Stefan, 2018. "Bankensysteme aus raumwirtschaftlicher Perspektive," Working Paper Forschungsförderung 099, Hans-Böckler-Stiftung, Düsseldorf.
    12. Begoña Giner & Francisca Pardo, 2015. "How Ethical are Managers’ Goodwill Impairment Decisions in Spanish-Listed Firms?," Journal of Business Ethics, Springer, vol. 132(1), pages 21-40, November.
    13. Schleer, Frauke & Semmler, Willi, 2013. "Financial sector-output dynamics in the euro area: Non-linearities reconsidered," ZEW Discussion Papers 13-068, ZEW - Leibniz Centre for European Economic Research.
    14. Michiel Bijlsma & Ferry Haaijen & Casper van Ewijk, 2014. "Economic growth and funded pension systems," CPB Discussion Paper 279, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Stolzenburg, Ulrich, 2018. "Vollgeld und Vollreserve: Was bringt eine neue Geldordnung?," Kieler Beiträge zur Wirtschaftspolitik 15, Kiel Institute for the World Economy (IfW Kiel).
    16. Clemens Bonner & Sylvester C. W. Eijffinger, 2016. "The Impact of Liquidity Regulation on Bank Intermediation," Review of Finance, European Finance Association, vol. 20(5), pages 1945-1979.
    17. Ricardo Barradas, 2019. "Financialization and Neoliberalism and the Fall in the Labor Share: A Panel Data Econometric Analysis for the European Union Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(3), pages 383-417, September.
    18. Nobi, Ashadun & Alam, Shafiqul & Lee, Jae Woo, 2017. "Dynamic of consumer groups and response of commodity markets by principal component analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 482(C), pages 337-344.
    19. Kappler, Marcus & Schleer, Frauke, 2013. "How many factors and shocks cause financial stress?," ZEW Discussion Papers 13-100, ZEW - Leibniz Centre for European Economic Research.
    20. Olena Oliynyk & Viktor Adamenko & Ludmila Oliynyk, 2015. "The Comparative Analysis of Financial System of Czech Republic, Poland and Ukraine," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(6), pages 2067-2076.
    21. Piergiorgio Alessandri & Fabio Panetta, 2015. "Prudential policy at times of stagnation: a view from the trenches," Questioni di Economia e Finanza (Occasional Papers) 300, Bank of Italy, Economic Research and International Relations Area.
    22. 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.
    23. Nobi, Ashadun & Lee, Jae Woo, 2016. "State and group dynamics of world stock market by principal component analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 450(C), pages 85-94.
    24. Hasan Dinçer & Ozlem Olgu Akdeniz & Umit Hacioglu, 2018. "Competitive strategy selection in the European banking sector using a hybrid decision-making approach," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(1), pages 213-242.
    25. Dirk Niepelt & Ulrich Stolzenburg & Alexander Rathke & Jan-Egbert Sturm & Klaus Abberger & Mathias Binswanger & Hans Gersbach & Elisabeth Springler, 2018. "Monetary Order: a Discussion of the Sovereign Money Concept?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(16), pages 03-19, August.

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    More about this item

    Keywords

    financial sector structure; market-based; bank-based; principal components analysis;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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