Deregulation, Integration and Market Structure in European Banking

Abstract:     
European banking has gone through a process of deregulation and integration which reaches its peak with the adoption of the euro in 1999. This paper argues that the characteristics in terms of seller concentration of the new equilibrium with integrated markets will depend on the nature of banking competition. Markets will remain moderately concentrated if banks engage in competition through standard strategic variables such as price or customer service. Concentration is likely to increase substantially if competition focuses on endogenous sunk costs. The paper provides an empirical analysis which is based on data for eleven EU countries and the period 1981-1995.

Note: This is a description of the article and not the actual abstract.

JEL Classification: G20, G21

Accepted Paper Series