Efficiency Gains of a European Banking Union

Duisenberg school of finance - Tinbergen Institute Discussion Paper TI 13-26/IV/DSF 51

25 Pages Posted: 13 Feb 2013

See all articles by Dirk Schoenmaker

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Arjen Siegmann

Vrije Universiteit Amsterdam, School of Business and Economics

Date Written: February 11, 2013

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.

Keywords: Financial Stability, Financial Crises, Public Good, International Banking

JEL Classification: F33, G01, G28, H41

Suggested Citation

Schoenmaker, Dirk and Siegmann, Arjen, Efficiency Gains of a European Banking Union (February 11, 2013). Duisenberg school of finance - Tinbergen Institute Discussion Paper TI 13-26/IV/DSF 51, Available at SSRN: https://ssrn.com/abstract=2214919 or http://dx.doi.org/10.2139/ssrn.2214919

Dirk Schoenmaker (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Arjen Siegmann

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, NOT IN US OR CANADA 1081 HV
Netherlands

HOME PAGE: http://https://research.vu.nl/en/persons/arjen-siegmann

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
514
Abstract Views
2,379
Rank
100,544
PlumX Metrics