Efficiency Barriers to the Consolidation of the European Financial Services Industry

19 Pages Posted: 8 Jun 2000  

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Robert DeYoung

University of Kansas School of Business

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

Abstract

Cross-border consolidation of financial institutions within Europe has been relatively limited, possibly reflecting efficiency barriers to operating across borders, including distance; differences in language, culture, currency, and regulatory/supervisory structures; and explicit or implicit rules against foreign competitors. EU policies such as the Single Market Programme and European Monetary Union attenuate some but not all of these barriers. The evidence is consistent with the hypothesis that these barriers offset most of any potential efficiency gains from cross-border consolidation. Banks headquartered in other EU nations have slightly lower average measured efficiency than domestic banks and non-EU-based foreign banks.

Keywords: Banks, Mergers, Efficiency, Europe, Financial institutions

JEL Classification: G21, G22, G24, G28, G34, F23

Suggested Citation

Berger, Allen N. and DeYoung, Robert and Udell, Gregory F., Efficiency Barriers to the Consolidation of the European Financial Services Industry. European Financial Management, Vol. 6, No. 4, December 2000 . Available at SSRN: https://ssrn.com/abstract=231907

Allen N. Berger (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Robert DeYoung

University of Kansas School of Business ( email )

Summerfield Hall
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-1806 (Phone)

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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